Julio Has a Savings Account in a Foreign Country

Multiple Choice

Julio has a savings account in a foreign country. The account earned $5,000 interest during 2020 but he only received $4,500 since $500 for foreign taxes was withheld by the bank. All amounts are stated in Canadian dollars. The effect on Julio's 2020 tax return is:

A) An increase in taxable income of $4,500 and a foreign tax credit of $0.
B) An increase in taxable income of $5,000 and a foreign tax credit of $500.
C) An increase in taxable income of $5,000 and a foreign tax credit of $75.
D) Nothing since the interest was earned outside of Canada.