Comments on: TFSA & Non-Resident Withholding Taxes

By: Tax Guy

Tax Guy — Thu, 03 Mar 2011 02:57:53 +0000

CIM appears to be a corporation. Also, be aware that US REITs and Canadian REITs are very different investments.

By: Andi V

Andi V — Thu, 03 Mar 2011 02:38:36 +0000

I cannot vouch for one or the other but these are well-known REITs: CIM, ANH. No tax under RRSP, 30% under TSFA.

By: Tax Guy

Tax Guy — Thu, 03 Mar 2011 02:06:47 +0000

A REIT stands for “real estate investment trust.” Under the tax treaty distributions from a trust are not dividends and are not interest. They are considered straight income and would be subject to maximum withholding tax regardless of what kind of account you received the payments in (i.e. a TFSA or an RRSP.

If you received a REIT payment in an RRSP and There was no withholding tax, I suspect that the REIT was considered a corporation under US law.

By: Andi V

Andi V — Thu, 03 Mar 2011 01:32:42 +0000

@chris – no! I can confirm. I have such investments, including REIT under RRSP and in the statements they didn’t hold a cent. RRSP is covered by US-Canada fiscal treaty, RESP and TSFA are NOT covered.

By: chris

chris — Thu, 03 Mar 2011 01:24:58 +0000

Tax Guy,
So if i own a single REIT that pays dividends or any dividend paying stock in the US with my RRSP trading account I don’t have to pay tax?

Thank for your time and patience!!!!!!!

chris

By: Tax Guy

Tax Guy — Wed, 02 Mar 2011 21:14:03 +0000

Assuming the 15% is the US tax then no. You may want to contact the ETF for more info or your broker.

By: Darren

Darren — Wed, 02 Mar 2011 18:27:25 +0000

I hold a US Emerging Market ETF (VWO) in a non registered account. I only get a receipt for the 15% US withholding tax not what is paid to Brazil, China, etc by the fund.

If I swapped it into my RSP, would I still pay the 15% to USA?

By: Tax Guy

Tax Guy — Wed, 02 Mar 2011 15:37:42 +0000

Chris,
This article was rewritten 2 days ago and is about the TFSA. Not sure where the REIT and RRSP reference is coming from.

The treaty only exempts interest an dividends from US companies received by an RRSP or RRIF. Whether a US REIT is paying interest or dividends is a question of fact. If the payments are from a corporations in respect of ownership, then they are most likily dividends otherwise they are not and will be subject to the US’s 35% standard withholding tax with no treaty reduction.

By: chris

chris — Wed, 02 Mar 2011 05:39:10 +0000

Hi taxguy,

So if i buy a us reit with rsp money the dividends are not taxed because of the canada-us income tax treaty? I’m pretty sure that was what your post said but it was from 2009.

thanks!

By: Tax Guy

Tax Guy — Mon, 28 Feb 2011 21:41:00 +0000

Becky,
I can’t really answer your question because I’m not sure if you live in Canada or not. Take a read through this whole page fromt he CRA.

As a US citizen you report the gross gain on your 1040 and claim a foreign tax credit or itemized deduction for the withholding tax.