Foreign Tax Credit follow up question

Hi Steven.
What happens if the US taxes paid (on T2209) exceed the Canadian federal tax...can't the US paid taxes remaining balance be applied against the Canadian provincial tax calculation, as part of the Provincial foreign tax credit?
Clarification on T2036- the provincial foreign tax credit refers you to use the Federal Foreign Tax Credits.
So on T2209 - the Federal tax credit on line 1, I calculated the Non-business tax paid to a foreign country to include Federal tax, State tax and FICA. This is then compared to the Canadian basic federal tax + Surtax on Line 2. On line 3 it says to choose lesser of 1 or 2. This amount of course is the Federal non-business foreign tax credit.
Can one choose a number to be less than line 1, to offset the Federal tax on the return, leaving a balance for the provincial foreign tax credit to be use against the provincial taxes?
The reason I ask this is due to the Provincial Foreign tax credit calculation.
Before you complete T2036, it says to complete the federal form and if the amount of federal tax credit you are entitled to deduct is equal to the foreign non business tax you paid, your provincial tax credit would be zero.
Let me further clarify using numbers:
Form T2209
Line 1 10,000
Line 2 15,000
Line 3 7,000 (as T1 line 429 only needs this, versus 10,000)
On form T2036, the Federal Foreign tax credit of $7K is less than $10K, and thus have $3K to apply toward Provincial credit.
Am I correct in this interpretation? Else there will be no provincial foreign tax credit even though the $3K is not necessary for the federal.
thanks

Hi, I am having this same issue with wasted credits. My federal foreign tax credit is greater than my federal tax.

Form T2036 says "if the amount of foreign federal tax you are ENTITLED to deduct is equal to the tax you paid, your provincial tax credit would be zero".

Please post if you figure out the answer. I'd really like to apply the unused federal foreign tax credit to my provincial tax credit!

Thanks!

Of course. Once you determine the allowable ammount on your federal line, you can use whatever's left on your provinical line.

I think thta is pretty clear in the guide.


You cannot however carry forward unused foreign taxes to future (or past) years, like you can on your US return.

This is all I found in the guide and I don't think it really addresses my issue:

Line 405 – Federal foreign tax credit
This credit is for foreign income or profits taxes you paid
on income you received from outside Canada and reported
on your Canadian tax return. Complete Form T2209, Federal
Foreign Tax Credits, to calculate your credit and enter the
amount from line 10 on line 405 of Schedule 1.
Note
You may have deducted an amount on line 256 for
income that is not taxable in Canada under a tax treaty.
In that case, do not include that income, or any tax
withheld from it, in your foreign tax credit calculation.
Receipts – If you are filing a paper return, include your
completed Form T2209 and documents, such as official
receipts, that show the foreign taxes you paid. If you paid
taxes to the United States, attach your W-2 information slip,
U.S. 1040 return, and any other supporting documents that
apply. If you are filing electronically, keep

wow, able to search a document, and yet miss the very point you are looking for:

Tax Tip
If you paid foreign taxes on foreign income you
received, do not reduce the amount you report by the
amount of tax the foreign country withheld. However,
you may be able to claim a foreign tax credit when you
calculate your federal and provincial or territorial taxes.
For more information, see Form T2209, Federal Foreign
Tax Credits, and Form T2036, Provincial or Territorial
Foreign Tax Credit.

The issue is that, in the cases cited in the original posts, the provincial tax form is structured such that excess federal foreign tax credit cannot be applied to provincial tax.

Foreign tax paid = 1000
Federal foreign tax credit = 1000
Federal tax = 500

Excess tax credit = 500

Provincial form:
Foreign tax paid = 1000
Federal foreign tax credit = 1000
Provincial foreign tax credit = 0

No. If you use $500 of the $1000, you'll have $500 left to use provincially.

You must use whatever you can federally first however.

In your example, the federal foreiegn tax credit is $500
Really isn't that hard.

I agree that it's a simple and sensible concept. However, the form makes it seem like it's invalid.

I think the problem is that the form is broken for some cases. I will write a note explaining I have used my excess federal credit and hope for the best.