CRA Review of Your RSU Foreign Tax Credit: What to Send
When RSU income is taxed in both countries, the CRA often asks you to support the credit on Form T2209. The U.S.-source income sits inside a Canadian T4 at line 10100, so the CRA wants to see where it is, why it's U.S.-source, and that the U.S. tax was actually paid.
A review response answers four questions:
Reported in Canada? The T4
How much is U.S.-source? Sourcing schedule + evidence
Final U.S. tax paid? U.S. return + IRS transcript
Credit calculated right? T2209 / T2036 workings
Documents to include
A. The CRA letter and your cover letter
Copy of the CRA review letter, showing the reference or case number
Cover letter summarizing the claim and listing every enclosure (sample below)
Form AUTH-RPT, or confirmation that Icantax is authorized to represent you
B. The income was reported in Canada (Question 1)
T4 slip(s) showing the RSU income in box 14
Canadian pay stubs or employer statement showing the RSU amounts included in the T4
C. How much is U.S.-source, and why (Question 2)
RSU sourcing schedule for each tranche (template below)
Employer RSU sourcing or global mobility statement, if available
Grant agreements or award summaries showing each grant date and vesting schedule
Release confirmations for each vest: date, shares, value and tax withheld
Evidence of where you worked: transfer letter with effective date, work permit or PR date, lease or move documents, and a travel calendar for U.S. trips after the move
Source of the exchange rate for each vest (Bank of Canada daily or annual average rate)
D. The U.S. tax was actually paid (Question 3)
W-2(s) showing the U.S.-source RSU income and U.S. tax withheld
Filed U.S. return, all pages: Form 1040-NR, or dual-status 1040 with its 1040-NR statement, with schedules
State return, if state tax was paid and claimed
IRS account transcript confirming the final tax assessed and any refund issued. Without it, the credit is usually denied.
State tax account statement or notice of assessment, if state tax is claimed
Any amended U.S. return or IRS notice that changed the U.S. tax
E. The credit is calculated correctly (Question 4)
T2209 and T2036 workings: foreign non-business income, foreign tax claimed, and the limit calculation
If the U.S. return has other U.S. income, a calculation of how much U.S. tax relates to the RSU income
RSU sourcing schedule template
One row per vesting tranche. The example row: grant September 1, 2023, transfer to Canada January 1, 2026, vest September 1, 2026.
Each row records the grant date, vest date, total workdays, U.S. workdays, U.S. %, vest value (USD), FX rate, vest value (CAD), U.S.-source amount (CAD) and U.S. tax (CAD), with a total row at the bottom. The example row:
Grant date: 2023-09-01
Vest date: 2026-09-01
Total workdays: 750
U.S. workdays: 585
U.S. %: 78%
Vest value USD: 100,000
FX rate: 1.37
Vest value CAD: 137,000
U.S.-source CAD: 106,860
U.S. tax CAD: from 1040-NR
Keep notes with the schedule: how workdays were counted (excluding weekends, holidays and vacation), the exchange rate source, and how U.S. tax was allocated to the RSU income if the U.S. return has other income.
Sample cover letter
Canada Revenue Agency
Re: [Full name] · SIN [xxx-xxx-xxx] · Tax year [2026] · Reference [number from the CRA letter]
In response to your letter dated [date], I'm providing support for the federal and provincial foreign tax credits claimed on Forms T2209 and T2036.
I transferred from my employer's U.S. office to its Canadian office on [move date] and became a resident of Canada on that date. Restricted stock units granted while I worked in the U.S. vested on [vest dates] and are included in full in box 14 of my T4 from [Canadian employer], reported on line 10100.
Under U.S. tax rules and the Canada-U.S. tax treaty, the portion of each vest earned while I worked in the U.S. is U.S.-source income. That portion, [amount] CAD, was taxed in the U.S. on my Form 1040-NR. The final U.S. federal tax on it was [amount] USD ([amount] CAD), confirmed by the enclosed IRS account transcript. The foreign tax credit claimed is the lesser of this amount and the Canadian tax on the same income.
The income is not reported separately on line 10400 because it is already included on line 10100 through my T4.
Enclosed: [list each document]
[Signature] · [Phone] · [Date]
How and when to submit
Deadline · usually 30 days. Reply by the date in the letter. If you need more time, call the number on the letter before the deadline.
Upload online. Submit documents in CRA My Account, or Represent a Client if Icantax replies for you. Enter the reference number.
Copies, in order. Send copies, not originals, as clearly named PDFs in the same order as the cover letter. Keep the confirmation number.
Still denied? File a Notice of Objection within 90 days of the notice of reassessment.
Common reasons the credit is denied
Claiming U.S. tax withheld instead of the final U.S. tax. How to avoid it: claim the tax from the filed 1040-NR; correct it if a U.S. refund changes it.
No IRS transcript. How to avoid it: order the account transcript once the IRS has processed the return.
No explanation of sourcing. How to avoid it: include the sourcing schedule, employer statement and work-location evidence.
Reviewer can't find the foreign income. How to avoid it: state that it's included in T4 box 14, on line 10100.
U.S. tax claimed on Canadian-source income. How to avoid it: claim only the U.S. tax on the U.S.-source share.
Social Security and Medicare claimed. How to avoid it: claim only U.S. federal and state income tax.
Exchange rate not supported. How to avoid it: show the Bank of Canada rate used for each vest.
Talk to Icantax
Received a CRA review letter? Icantax prepares the sourcing schedule, assembles the package, and replies to the CRA on your behalf as your authorized representative.
Call 604-496-2200 or email info@icantax.ca — Unit 110 - 13575 107A Avenue, Surrey, B.C.
Mon–Fri 10 a.m.–5 p.m. · Sat 10 a.m.–4 p.m.
General information, not tax advice for your situation.Content coming soon.
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