Beneficial owners recognised for tax purposes - Canada

08.02.2013

The following types of beneficial owner are recognised for tax purposes in Canada:

  • Residents of a Double Taxation Treaty (DTT) country:
    • Who qualify as non-resident according to Form NR301 (General);
    • Who qualify as non-resident according to Form NR302 (Partnerships);
    • Who qualify as non-resident according to Form NR303 (Hybrid entities);
  • Tax-exempt entities;
  • Residents of Canada.

Note: Partnerships (Form NR302) and Hybrid Entities (Form NR303) are not considered eligible for relief/exemption of withholding tax at source and must apply for a reclaim via the standard refund procedure instead.

Residents of a DTT country - non-resident according to Form NR301 (General)

Debt securities:

Clearstream Banking applies 0% withholding tax by default. No certification or tax instruction is required to obtain this exemption.

However, 25% withholding tax may be applied upon request from customers if the underlying final beneficial owner is a Related non-resident not dealing at arm's-length with the issuer or in the rare case of Participating Interest.

Equities and trust instruments:

Clearstream Banking will apply 25% withholding tax by default.

Relief at source on equity and trust unit distributions (not on distributions from capital trust securities) is available to a beneficial owner that qualifies for the benefit of a reduced rate of withholding tax in accordance with a DTT between its country of residence and Canada and who qualify as non-residents according to Form NR301. The maximum rate of withholding tax is defined in the relevant DTT.

If the beneficial owner has not obtained relief at source, a reclaim of the relevant amount of withholding tax is available through Clearstream Banking by means of quick refund or standard refund.

Note: Only beneficial owners that qualify as non-residents according to Form NR301 will be eligible to claim DTT relief at source through Clearstream Banking. Partnerships (NR302) and Hybrid Entities (NR303) are not considered eligible and must apply for a refund via the standard refund procedure instead.

Residents of a DTT country - non-resident according to Form NR302 (Partnerships)

Debt securities:

Clearstream Banking applies 0% withholding tax by default. No certification or tax instruction is required to obtain this exemption.

However, 25% withholding tax may be applied upon request from customers if the underlying final beneficial owner is a Related non-resident not dealing at arms-length with the issuer or in the rare case of Participating Interest.

Equities and trust instruments:

Clearstream Banking will apply 25% withholding tax by default. No relief at source is available via Clearstream Banking. Eligible beneficial owners may, however, apply for a reclaim of the relevant amount of withholding tax through Clearstream Banking via standard refund.

Note: Only beneficial owners that qualify as non-residents according to Form NR301 will be eligible to claim DTT relief at source through Clearstream Banking. Partnerships (NR302) and Hybrid Entities (NR303) are not considered eligible for relief at source or quick refund and must apply for a refund via the standard refund procedure instead.

Residents of a DTT country - non-resident according to Form NR303 (Hybrid Entities)

Debt securities:

Clearstream Banking applies 0% withholding tax by default. No certification or tax instruction is required to obtain this exemption.

However, 25% withholding tax may be applied upon request from customers if the underlying final beneficial owner is a Related non-resident not dealing at arms-length with the issuer or in the rare case of Participating Interest.

Equities and trust instruments:

Clearstream Banking will apply 25% withholding tax by default. No relief at source is available via Clearstream Banking. Eligible beneficial owners may, however, apply for a reclaim of the relevant amount of withholding tax through Clearstream Banking via standard refund.

Note: Only beneficial owners that qualify as non-residents according to Form NR301 will be eligible to claim DTT relief at source through Clearstream Banking. Partnerships (NR302) and Hybrid Entities (NR303) are not considered eligible for relief at source or quick refund and must apply for a refund via the standard refund procedure instead.

Tax-exempt entities

Debt securities:

Clearstream Banking applies 0% withholding tax by default. No certification or tax instruction is required to obtain this exemption.

However, 25% withholding tax may be applied upon request from customers if the underlying final beneficial owner is a Related non-resident not dealing at arms-length with the issuer or in the rare case of Participating Interest.

Equities:

Clearstream Banking will apply 25% withholding tax by default. Exemption at source is available to beneficial owners who are recognised as tax-exempt by the Canadian Tax Authorities.

If the beneficial owner has not obtained relief at source, a reclaim of the relevant amount of withholding tax is available through Clearstream Banking via quick refund or standard refund.

Trust instruments:

Clearstream Banking will apply 25% withholding tax by default. Exemption at source is not available to beneficial owners who are recognised as tax-exempt by the Canadian Tax Authorities and exempt beneficial owners must apply for a refund via the standard refund procedure instead.

Residents of Canada

As of 1 January 2012, customers must refrain from holding, on their Clearstream Banking account, securities on behalf of beneficial owners (including themselves, if applicable) who are resident for tax purposes in Canada as defined by relevant Canadian laws and regulations. Such beneficial owners are not eligible for any relief at source or reclaim of withholding tax on income from Canadian seurities via Clearstream Banking.