Canadian equities – Relief at source – Eligibility, documentation, deadlines

04.01.2024

Withholding tax

Standard rate of withholding tax:

25%

Holding requirements / restrictions:

No

The standard rate of withholding tax on dividends from Canadian equities is 25% in Clearstream Banking.

Important note:

It is the responsibility of the client to ensure that final beneficial owners are eligible for the tax rates applied for, including the Clearstream Banking default rate. Neither Clearstream Banking nor its local depository has any direct or indirect liability towards the Canadian authorities in this regard.

Eligible beneficial owners

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

Eligible beneficial owners

Rate applicable at source

Non-residents of a double taxation treaty country (DTT) where the applicable rates of Canadian withholding tax are the same as the rates specified in the Canada – United States Tax Treaty (that is, 15%) and who qualify as a non-resident as per the requirements stated in the Canadian Revenue Agency (CRA) Form NR301

Tax treaty rates that are the same as the rates specified in the Canada – United States Tax Treaty (that is, 15%)

Non-resident tax-exempt entities

0%

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

Relief at source is available to beneficial owners who qualify as a non-residents of a double taxation treaty country (DTT) and where the applicable rates of Canadian withholding tax are the same as the rates specified in the Canada – United States Tax Treaty (that is, 15%) and who qualify as a non-resident as per the requirements stated in the Canadian Revenue Agency (CRA) Form NR301.

Non-resident tax-exempt entities

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

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:

Non-residents of a double taxation treaty country (DTT) where the applicable rates of Canadian withholding tax are the same as the rates specified in the Canada – United States Tax Treaty (that is, 15%) and who qualify as a non-resident as per the requirements stated in the Canadian Revenue Agency (CRA) Form NR301:

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

The client 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.

For non-resident tax-exempt entities:

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

The certificate of exemption must in addition specify the CRA identification number (sometimes referred to as the “control number”) of the beneficial owner.

In addition to the above, the following supporting documentation must be provided by clients immediately upon request:

  • A CRA Form 301 signed by the beneficial owner (for clients acting as intermediary and requesting DTT relief for underlying beneficial owners);
  • A list of beneficial owners in the format prescribed by Clearstream Banking;
  • A proof of tax residence for beneficial owners eligible to obtain a reduced rate of withholding tax at source in accordance with a DTT between their country of residence and Canada;
  • Any other tax documentation required from time to time.

Important note:

It is the responsibility of the Clearstream Banking client to ensure that final beneficial owners are eligible for the tax rates applied for, including the Clearstream Banking default rate. Neither Clearstream Banking nor DTCC or any other agent has any direct or indirect liability towards the Canadian authorities in this regard.

If Clearstream Banking is informed after the tax instruction / certification deadline indicated below, that a beneficial owner has obtained a relief at source to which he is not entitled (for example due to incorrect entitlement, data, certification etc.), Clearstream Banking will not assist in withholding the tax or paying it to the respective tax authorities.

Deadlines

In order to benefit from a relief at source from dividend distributions from Canadian equities, clients must ensure that Clearstream Banking receives the above-described documents by the deadline indicated in the client notification sent per income event.

Clearstream Banking will not take any responsibility in respect of any losses, claims, penalties, taxes and interest thereon due to no action taken by the client regarding the above-mentioned matter or due to receipt of documents after the indicated deadline.

In order to avoid any delays or loss of documentation, Clearstream Banking clients are strongly encouraged to submit tax documentation by special courier or registered mail.

Default action

Clients are informed that if Clearstream Banking does not receive the certification prior to the prescribed deadline, it will apply the maximum default rate of withholding tax for the applicable dividend payment.