Relief at source - eligibility, documentation, deadlines - Canadian equities

16.11.2015

Who can obtain relief at source?

Beneficial owners are eligible for relief at source from withholding tax on income from Canadian equities as follows:

Eligible beneficial ownersRate applicable at source
Resident of a DTT country (non-resident according to Form NR301) aTax treaty or 25%, whichever is lower
Tax-exempt entities0%

a. Partnerships (NR302) and Hybrid Entities (NR303) are not considered eligible and any reclaim applications must be made via the standard refund procedure.

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

Relief at source is available to beneficial owners who qualify for the benefit of a reduced rate of withholding tax in accordance with a DTT between their 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.

Tax-exempt entities

Exemption at source is available to beneficial owners who are recognised as tax-exempt by the Canada Revenue Agency (CRA).

In both cases, 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, by submitting the appropriate documentation.

Important note:

Customers acting as Swiss intermediary for final beneficial owners of Canadian equities can also obtain relief at source via Clearstream Banking.

Documentation requirements

For relief at source of withholding tax on income from Canadian equities, the documentation requirements vary according to the type of eligible beneficial owner, as follows:

For Residents of a DTT country who qualify as non-resident according to Form NR301:

  • One-Time Certificate – Canadian Equities and Trust Instruments;
  • Per-Payment Breakdown of Holdings (when applicable);
  • CRA Form NR301, as follows:
    • For customers holding proprietary assets: An original Form NR301, signed by the customer as final beneficial owner qualifying for DTT relief according to Form NR301, must be submitted to Clearstream Banking directly.
    • For customers acting as intermediary: An original Form NR301, signed by the final beneficial owner qualifying for DTT relief according to Form NR301, must be submitted to and retained by the customer, who must provide it promptly to Clearstream Banking upon request at any time.

      The customer must exercise due diligence with respect to the information provided on this form and must verify whether the information is sufficient to claim DTT relief on behalf of the final beneficial owner.

and, in addition, for pension plans that are exempt by virtue of a DTT:

  • A letter from the pension plan declaring that it is operated exclusively to provide pension or retirement benefits and that it qualifies for exemption on dividend income under the specified article of the relevant country treaty with Canada; and
  • A letter from the local tax authority confirming the tax status of the pension or retirement plan.

NB: Currently only the below listed treaty countries have a clause in the DTT granting pension funds full tax exemption. The terms of each treaty should however be referred to as they differ with respect to the specific requirements:

  • Denmark
  • France
  • Ireland
  • Oman
  • Spain (from Dec 12, 2015)
  • Sweden
  • Switzerland
  • UK

and, upon request:

  • List of Beneficial Owners – Canadian Securities;
  • CRA Form NR301 (from customers acting as intermediary);
  • Certificate of Residence;
  • Any other tax documentation as required from time to time.

For Tax-exempt entities:

  • One-Time Certificate – Canadian Equities and Trust Instruments;
  • Per-Payment Breakdown of Holdings (when applicable);
  • A Withholding Tax Exemption Letter issued by the CRA (including the “tax-exempt registration number").

Important notes:

Customers acting as Swiss intermediary are required to submit a One-Time Certificate – Canadian Equities and Trust Instruments - Swiss Intermediary only.

Positions for which customers have not submitted the requested documentation before the prescribed deadline will be taxed, through Clearstream Banking, at the maximum applicable rate.

Form descriptions are presented according to the procedures available for relief and/or reclaim of withholding tax on income from Canadian equities.

Deadlines for receipt of documents

Documentation for relief at source from withholding tax on dividends from Canadian equities must be received by Clearstream Banking by the following dates:

DocumentDeadline for receipt by Clearstream Banking
One-Time Certificate – Canadian Equities and Trust InstrumentsThree business days before the first dividend payment date by 10:00 CET
Per Payment Breakdown of HoldingsThree business days before the dividend payment date by 10:00 CET
CRA Form NR301Own assets: Three business days before the first dividend payment date by 10:00 CET
Client assets: Upon request
Certificate of Tax ExemptionThree business days before the dividend payment date by 10:00 CET
Letter from the pension planThree business days before the dividend payment date by 10:00 CET
Letter from the local tax authority confirming the tax status of the pension or retirement planThree business days before the dividend payment date by 10:00 CET
Certificate of ResidenceUpon request
List of Beneficial Owners - Canadian SecuritiesUpon request