Market Taxation Guide - Canada

28.04.2014

This Market Taxation Guide for Canada provides the following details:

  • Reference information about all taxes applied at source, through Clearstream Banking and its local depositories, to securities deposited in Clearstream Banking; and
  • Instructions for obtaining relief at source or a refund of withholding tax, where these are available, through Clearstream Banking.

New and improved tax information and procedures that become available will be included on an ongoing basis.

Important note:

This Market Taxation Guide (including any attachments and other links) is for informational purposes only and is not intended and should not be considered to be legal advice on any subject matter. Readers of this Market Taxation Guide, whether customers or otherwise, should not act or refrain from acting on the basis of any information included in this Market Taxation Guide without seeking appropriate legal or other professional advice. Copies of the content (in paper or electronic form) may be delivered to a third party for personal use only.

Withholding Tax

N.B.: It is the customer's responsibility to ensure that final beneficial owners are eligible for the tax rates applied, including the Clearstream Banking default rates. It is the responsibility of the customer to comply with this obligation. Neither Clearstream Banking nor its local depository has any direct or indirect liability towards the Canadian authorities in this regard.

Debt securitiesHolding restriction?Withholding tax rateRelief at
source
Quick
refund
Standard
refund
Yes0% - 25%NoNoNo

No withholding tax is imposed on interest paid on Canadian debt securities in Clearstream Banking.

The only exceptions are in very rare cases of related non-residents not dealing “at arm’s length” with the issuer and for Participating Interest, in which cases 25% withholding tax is applicable and may be applied upon request from the customer.

EquitiesHolding restriction?Withholding tax rateRelief at sourceQuick
refund
Standard refund
Yes25%
Tax-exempt entitiesYesYesYes
Residents of a Double Taxation Treaty (DTT) country who qualify as non-resident per Form NR301 (General)YesYesYes
Resident of a DTT country who qualify as non-resident per Form NR302a (Partnerships)NoNoYes
Resident of a DTT country who qualify as non-resident per Form NR303a (Hybrid entities)NoNoYes
Trust instrumentsHolding restriction?Withholding tax rateRelief at
source
Quick
refund
Standard
refund
Yes25%
Residents of a Double Taxation Treaty (DTT) country who qualify as non-resident according to Form NR301 (General)YesbYesYes
Resident of a DTT country who qualify as non-resident according to Form NR302a (Partnerships)NoNoYes
Resident of a DTT country who qualify as non-resident according to Form NR303a (Hybrid entities)NoNoYes
Tax-exempt entitiesNoNoYes

a. Partnerships (Form NR302) and Hybrid entities (Form NR303) are not considered eligible and must apply to reclaim withholding tax via the standard refund procedure instead.
b. Relief is only available on trust unit distribution and not on distributions from capital trust securities.

Swiss intermediaries

Financial intermediaries resident in Switzerland and holding Canadian securities on behalf of final beneficial owners are entitled to the application of withholding tax on such holdings according to the Double Taxation Treaty (DTT) between Canada and Switzerland and under the terms of Canadian Information Circular IC76-12.

Such Swiss intermediaries must be fully aware of and compliant with all of their obligations as stated in the DTT and in such terms.

Relief at source and quick refund are available to Clearstream Banking customers who act as Swiss Intermediary for final beneficial owners of Canadian equities and trust instruments.

Holding restriction

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.

The customer shall indemnify and hold harmless Clearstream Banking, its directors, officers, agents, employees or affiliates (the “Indemnified Persons”) for any loss, expense, liability, damage or claims incurred by any of the Indemnified Persons as a result of the non-compliance with this holding restriction.

Capital Gains Tax

There is no capital gains tax withheld through Clearstream Banking on securities held in Clearstream Banking. Capital gains tax may however be payable on specific gains. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.

Stamp Duty

There is no stamp duty withheld through Clearstream Banking on securities held in Clearstream Banking. Stamp duty may however be payable on specific transactions. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.

Notes on tax reclaims

Customers warrant the completeness and accuracy of the information they supply to Clearstream Banking.

It is the customer's responsibility to determine any entitlement to a refund of tax withheld, to complete the forms required correctly and to calculate the amount due. Clearstream Banking is under no obligation to carry out any investigation in respect of such information.