Beneficial Owner – CRA Clarification

Beneficial owner – Regarding proper amount of withholding, the CRA bases it on name of address, UNLESS, there is a “care of” address or the mailing address and permanent address are different.  If there is a care of address, or difference in permanent address, the CRA requires a certificate to be completed by the holder. 

“In any doubtful case, a certificate, as described in ¶ 5(b), is required to be completed and forwarded to the payer by the payee in order that a lower rate of withholding tax, in accordance with a tax convention, can be applied. Otherwise the 25% rate will apply.

The Canada Revenue Agency (CRA) will accept the payee as beneficial owner of amounts paid to non-residents if the payee is an insurance corporation or pension trust that invests solely on its own behalf and includes such amounts in computing its revenue.”

Examples of the certificates are available in this CRA Information circular, pages 2 and 3.  http://www.cra-arc.gc.ca/E/pub/tp/ic76-12r6/ic76-12r6-e.pdf