• Overseas Employment Tax Credit
  • April 2, 2012
  • Law Firm: Miller Thomson LLP - Toronto Office
  • Canadian resident employees who qualify for the Overseas Employment Tax Credit (“OETC”) are entitled to a tax credit equal to the federal income tax otherwise payable (calculated using the employee’s average tax rate) on 80% of their qualifying foreign employment income, up to a maximum of $100,000. The OETC is deductible in determining the employee’s tax payable.

    The Budget proposes to phase out the OETC over four taxation years, beginning in 2013. During the phase-out period, the factor (currently 80%) applied to an employee’s qualifying foreign employment income in determining the credit will be reduced to:

    • 60% for the 2013 taxation year;

    • 40% for the 2014 taxation year; and

    • 20% for the 2015 taxation year.

    The OETC will be eliminated beginning in 2016.

    The phase-out will not apply to qualifying foreign employment income related to a project or activity committed to in writing before Budget Day.