A dividend payment from Canadian source dividends is subject to Canadian non-resident tax at a rate of 15%.
If the corporation is registered on the United States stock exchange, then it becomes IRS eligible, making the dividend payment subject to back-up withholding at the rate of 28%,
The 28% back-up withholding amount is reduced to 15% – the negotiated US – Canada treaty rate provided the holder submits a valid IRS form W9.
Without a W9, the holder is subject to 43% withholding tax (28% + 15%)
It’ s been hard getting to post here because I want to add technical content, but in my tax group, we’ve been dealing with smaller, less technical issues, such as discrepancies from the CRA, a change in T5 reporting resulting in FN numbers being given to businesses which transfer agents will need in order to report on their behalf, more QI stuff and changes to the online W-8BEN form.
All fun, just different.
I am working on a presentation outlining the responsibilities of a Qualified Intermediary in Canada.