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Browse - Computer Tips - When does the US deduct tax from dividends (for Canadians) ?

Date: 2011jan31
Keywords: USA, Canada, TFSA, RRSP, IRS

Q.  When does the US deduct tax from dividends (for Canadians) ?

A.  This info only applies to Canadians.  I think this info is correct but
you are crazy if you rely on me for tax advice!  Check the government
websites for authoritative answers.

RRSP
If you own US stocks inside a RRSP, the US does not deduct any tax from
dividends.

TFSA
If you own US stocks inside a TFSA, the US skims 30% tax on dividends.
Filling in a W-8BEN form (this is an IRS form) lowers this to 15%.
http://www.irs.gov/pub/irs-pdf/fw8ben.pdf
You can recover it (see below) but not at the favourable dividend tax rate.

Non-Registered
If you own US stocks in a non-registered account (ie not RRSP or TFSA)
the situation is the same as in a TFSA.  But you can get the tax back
by filling in a T2209 foreign tax credit form when you file your Canadian taxes.
http://www.cra-arc.gc.ca/E/pbg/tf/t2209/

Source for this info:
http://www.theglobeandmail.com/globe-investor/investor-education/how-to-avoid-withholding-tax-on-us-dividend-stocks/article1367786/

My Dividend Predictor Android app:
http://www.androidpit.com/en/android/market/apps/app/com.hogdex.DividendPredictor/Dividend-Predictor

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