Interest on NRE and NRO accounts is Taxable in Canada?

[sushmet]

Hi,

Could someone tell me if Interest earned on NRE and NRO accounts in India is taxable in Canada. If Yes/No does anybody can cite a clause in India Canada Tax treaty which speaks about this?

As interest on NRO account is taxable in India, I believe its non-taxable in Canada, but what about NRE account? especially when all the amount deposited in NRE account is earned in Canada and transferred to NRE account, and I have already paid taxes on this amount in Canada?

Do I need to show this income as a foreign income in my TAX RETURNS in Canada? Please advise?

 

[computergeek]

Normally, if you are a tax resident of Canada, your worldwide income is taxable in Canada. To the extent you must also pay taxes in a different jurisdiction then you may offset your Canadian tax liability to the extent of that foreign tax liability.

Tax treaties generally attempt to guarantee this model (so you are only taxed by one country on the income) but of course that can get rather complex.