Unlike France, Belgium, Spain or Italy, Canada has not signed any double taxation agreement with Morocco. This absence of a treaty creates a complex tax situation for the 100,000+ MRE residing in Canada (Montreal, Toronto): their Moroccan income (rents, dividends, CNSS pension) can theoretically be taxed twice. This guide explains the existing protection mechanisms despite this absence of a convention, notably the Canadian foreign tax credit, and the essential steps to take.
Costs & fees
| International tax specialist accountant | CAD 500–2,000/year | Strongly recommended without bilateral convention |
| T1 return with foreign income | CAD 200–500 | Accountant service to complete T2209 and T1135 |
| T1135 form (foreign assets > 100k CAD) | Included in return | CAD 2,500/year penalty if forgotten |
| CRA penalties for omissions | 5–50% of omitted tax | Plus compound interest at prescribed rate |
Timeline
Identify All Moroccan Income and Taxes Paid
Before starting your Canadian return, list all your income from Moroccan sources: rents received (after deductions in Morocco), dividends from Moroccan companies, CNSS pension or retirement from a Moroccan employer, interest on Moroccan bank accounts, capital gains on real estate sales. For each category, note the gross amount, net amount after withholdings, and Moroccan taxes actually paid. This information is needed to calculate your foreign tax credit in Canada. Download your tax certificates from tax.gov.ma.
💡 Tip — Get a global tax status certificate from the Moroccan DGI summarizing all taxes paid during the year.
⚠️ Warning — Without a convention, you cannot assume your Moroccan income is exempt in Canada: all must be declared.
Declare This Income in the Canadian Tax Return (T1)
As a Canadian tax resident, you must declare your worldwide income in your T1 return (Income Tax and Benefit Return). Foreign income is reported according to its nature: foreign rents go in the rental income schedule, foreign dividends and interest in the corresponding boxes. Amounts must be converted to CAD at the Bank of Canada's annual average exchange rate. The CRA may also require conversion using the rate in effect on the day the income was received.
💡 Tip — Use the Bank of Canada exchange rate (bankofcanada.ca) to convert your Moroccan income to CAD.
⚠️ Warning — Failing to declare foreign income is a serious offense subject to significant penalties and potentially criminal prosecution.
Calculate and Claim the Foreign Tax Credit (Form T2209)
Even without a bilateral convention, Canada grants a foreign tax credit for taxes paid in third countries. This credit is claimed via form T2209 (Federal Foreign Tax Credits). It is calculated separately for business income and non-business income. For passive income (rents, dividends, interest), use the non-business income section. The credit is capped at Canadian federal tax on the same foreign income. A similar provincial credit also exists.
💡 Tip — The T2209 credit can significantly reduce your Canadian tax, sometimes eliminating it entirely if the Moroccan rate is high.
⚠️ Warning — The credit cannot exceed Canadian tax calculated on foreign income. Unused excess can be carried back (3 years) or forward (10 years) for business income.
Complete Form T1135 if Foreign Assets Exceed CAD 100,000
The Canada Revenue Agency requires any Canadian resident with foreign assets whose total value exceeds CAD 100,000 at any time during the year to complete form T1135 (Foreign Income Verification Statement). Moroccan assets covered include: bank accounts in Morocco, real estate (fair market value), investments, shares in Moroccan companies. This form is separate from the T1 return and must be submitted at the same deadline. The penalty for non-filing is CAD 2,500 per year of delay.
💡 Tip — Have your Moroccan real estate appraised by a notary or real estate agent to determine if you exceed the CAD 100,000 threshold.
⚠️ Warning — T1135 applies even if the assets generate no income. A family apartment in Morocco worth more than CAD 100,000 must be declared.
Consult an International Tax Specialist
The absence of a Canada-Morocco convention makes the tax situation more complex than for MRE in France or Belgium. Canadian rules on foreign income, transfer pricing, and FAPI (Foreign Accrual Property Income) rules may apply to certain structures for holding Moroccan assets. A Chartered Professional Accountant (CPA) specializing in international taxation can identify legal optimization strategies, such as creating a trust or structuring Moroccan rental income. Firms in Montreal and Toronto specialize in MRE taxation and know both systems' rules.
💡 Tip — Look for a CPA member of the Ordre des CPA du Québec or CPA Canada with an international tax specialization.
In depth
The absence of a tax convention between Canada and Morocco is an anomaly compared to other major Moroccan diasporas in Europe. Despite periodic diplomatic discussions, no convention has been ratified to date. This situation exposes MRE in Canada to a real risk of double taxation on their passive Moroccan income (rents, dividends, interest). The Canadian foreign tax credit mechanism (T2209) mitigates this risk but does not eliminate it completely: the credit is capped at Canadian tax on foreign income, and some Moroccan taxes (real estate capital gains taxes in particular) may not be recognized as qualifying income taxes under Canadian law. Canadian FAPI rules may also apply if a MRE holds more than 10% of a non-resident Moroccan company: in this case, certain passive income of the Moroccan company may be attributed directly to the Canadian MRE, even without distribution. Anticipatory tax planning with a bi-national expert remains the best protection against tax risks related to this treaty gap.
❌ Common mistakes to avoid
- ✕Believing a Canada-Morocco convention exists and not declaring Moroccan income in Canada
- ✕Forgetting the T1135 form when the value of Moroccan assets exceeds CAD 100,000
- ✕Not claiming the T2209 tax credit and paying taxes twice
- ✕Not converting Moroccan income to CAD at the correct Bank of Canada rate
🔗 Official links and resources
❓ Frequently asked questions
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