Line 25600 on the Canadian T1 return is where you claim “additional deductions” for income you already reported but that the Income Tax Act says should not be taxed in Canada. It covers a defined list: income exempt under a tax treaty, part of your U.S. Social Security benefits, workers’ compensation, social assistance paid on a means or needs test, pay from certain international organizations, and a few narrower categories. The deduction reduces your taxable income directly, so the amount you claim flows straight through to the tax you owe.
What You Can Deduct on Line 25600
Line 25600 is not a general write-off. Most of what goes on it flows from paragraph 110(1)(f) of the Income Tax Act, which lists specific amounts you can deduct after including them in income.1Justice Laws Website. Income Tax Act RSC 1985, c. 1 (5th Supp.) – Section 110
Tax treaty exempt income. If a treaty between Canada and another country exempts certain foreign income from Canadian tax, you still report the income on your return and then deduct it here. In the space beside Line 25600, you have to identify which treaty provision applies.2Canada.ca. Line 25600 – Additional Deductions
Employment with prescribed international organizations. Net employment income from a prescribed international organization is deductible. The prescribed list includes the United Nations and every UN specialized agency, plus three non-governmental organizations: the International Air Transport Association, the Société internationale de télécommunications aéronautiques, and the World Anti-Doping Agency.3Government of Canada. Income Tax Regulations – Section 8900 For the three non-governmental organizations, tighter conditions apply: you were not a Canadian citizen at any time in the year, you were a non-resident before starting the job, and you became a resident solely to take it.1Justice Laws Website. Income Tax Act RSC 1985, c. 1 (5th Supp.) – Section 110
Workers’ compensation. Compensation received under a federal or provincial workers’ compensation law for injury, disability, or death qualifies. One exception: if you received the payment in your capacity as an employer or former employer of the injured person, you cannot deduct it.1Justice Laws Website. Income Tax Act RSC 1985, c. 1 (5th Supp.) – Section 110
Social assistance. Payments made on the basis of a means, needs, or income test that you included in income are also deductible on Line 25600.1Justice Laws Website. Income Tax Act RSC 1985, c. 1 (5th Supp.) – Section 110
Two narrower categories round out the list. Members of a religious order who have taken a vow of perpetual poverty can deduct earned income and pension benefits turned over to the order under subsection 110(2).2Canada.ca. Line 25600 – Additional Deductions Members of the Canadian Forces or police officers serving on a deployed international operational mission can deduct their mission employment income up to the pay rate of a Lieutenant-Colonel, on missions designated by the Minister of National Defence or the Minister of Public Safety.1Justice Laws Website. Income Tax Act RSC 1985, c. 1 (5th Supp.) – Section 110
U.S. Social Security Benefits
This is the most common Line 25600 claim, and it has a rate trap worth watching. If you receive U.S. Social Security benefits and report them on Line 11500, you can deduct 15% of that amount on Line 25600 under the Canada–United States tax treaty. Eighty-five percent stays taxable in Canada.2Canada.ca. Line 25600 – Additional Deductions
A more generous 50% deduction applies if you have been a Canadian resident continuously receiving U.S. Social Security benefits since before January 1, 1996. The same 50% rate carries over to a surviving spouse or common-law partner who inherited the benefit, provided the deceased received benefits under that pre-1996 rule continuously until death and the survivor has been a Canadian resident receiving those benefits continuously since the death.2Canada.ca. Line 25600 – Additional Deductions If you qualify for 50% and claim only 15%, you overpay tax on a third of the benefit.
How to Claim It on Your Return
Line 25600 sits between net income and taxable income. It does not reduce net income, so income-tested benefits like the GST/HST credit and the Canada Child Benefit are unaffected. It does reduce taxable income, which is what your tax bill is calculated on.4Statistics Canada. Federal Income Taxes and Credits
In the space beside Line 25600, specify the deduction you are claiming. If you have more than one type, list each. The math is direct: add the eligible exempt amounts and enter the total. For U.S. Social Security, multiply the Line 11500 amount by 0.15, or 0.50 if you qualify for the grandfathered rate. For treaty-exempt employment income or prescribed international organization income, the deduction equals the net amount you already reported.
Documentation to Keep
The CRA can ask for proof, and if you cannot produce it, the deduction gets denied. What you need depends on which category you are claiming:
- Treaty-exempt income: statements from the foreign payer showing the nature of the work, the source country, and the treaty provision that applies. Check any T4 slip for codes or notations indicating treaty-exempt earnings.
- Prescribed international organizations: employment records showing the net employment income included on your return.
- Workers’ compensation: the T5007 slip or an equivalent statement from the compensation board.
- Religious orders: a formal letter from your order confirming the vow of perpetual poverty and that all earnings were transferred to the order.
- U.S. Social Security: Form SSA-1099 from the U.S. Social Security Administration, plus your record of the exchange rate used to convert to Canadian dollars.
Keep supporting documents for at least six years from the end of the tax year they relate to. That is the retention period under subsection 230(4) of the Income Tax Act,5Justice Laws Website. Income Tax Act RSC 1985, c. 1 (5th Supp.) – Section 230 and the CRA uses the same six-year standard for individual filers.6Canada Revenue Agency. How Long Should You Keep Your Income Tax Records
Getting the Benefit Before Filing Season
If you know a Line 25600 deduction will apply every year, you do not have to wait for a refund. Form T1213 lets you ask the CRA to authorize your employer to reduce the tax withheld from each paycheque. Once approved, your take-home pay goes up during the year.7Canada Revenue Agency. T1213 Request to Reduce Tax Deductions at Source You submit the form annually with documents supporting the expected deduction. It works well for recurring situations such as ongoing U.S. Social Security benefits or continuing employment with a prescribed international organization.
Penalties for a Claim You Do Not Qualify For
Claiming a deduction you are not entitled to carries real cost. Under subsection 163(2) of the Income Tax Act, a false statement or omission made knowingly or through gross negligence triggers a penalty of the greater of $100 or 50% of the understated tax attributable to the false claim.8Canada Revenue Agency. False Reporting or Repeated Failure to Report Income Compound daily interest also runs on the unpaid balance. The prescribed rate on overdue taxes for the second quarter of 2026 is 7%.9Department of Finance Canada. Interest Rates for the Second Calendar Quarter
A separate, lower penalty applies where you simply failed to report income across multiple years: the lesser of 10% of the unreported amount or 50% of the difference between the understated tax and any tax already withheld on that income.8Canada Revenue Agency. False Reporting or Repeated Failure to Report Income The CRA has wide discretion in deciding which category a given situation falls into, so if you are uncertain whether a deduction applies, get the documentation nailed down before you claim it rather than after.