Dividend withholding tax for Canadian stock in US account

[hammer]

This is a fairly difficult question for most people.

I have some canadian stocks in my Ameritrade US account in Canada traded on the NYSE. I was recently paid dividends in US dollars minus the 15 percent withholding tax.

1. Is the dividend originally payed in Canadian dollars and converted to US dollars?...thereby a slight conversion penalty.

2. How do you get back the dividend withholding tax?

[HighFlyer]

Assuming that this is a Canadian stock that is interlisted on an American exchange that trades in USD....

1. Is the dividend originally payed in Canadian dollars and converted to US dollars?...thereby a slight conversion penalty.

Yes, but the conversion rate was done by the company, not the brokerage house, so it is usually close to spot.

2. How do you get back the dividend withholding tax?

It is fully deductible on your Canadian tax return as 'foreign tax paid'.

[hammer]

Assuming that this is a Canadian stock that is interlisted on an American exchange that trades in USD....


Yes, but the conversion rate was done by the company, not the brokerage house, so it is usually close to spot.


It is fully deductible on your Canadian tax return as 'foreign tax paid'.

Wow thanks! The help desk guy had no clue at Ameritrade.

[15-20_God]

The fx conversion is done by the firm.
Are you holding a US security or a canadian one?
Divs from canadian co's are not subject to a withholding tax if you reside in canada.
Conversly, if you hold a US stock and it pays a dividend, there will be a withholding tax. It is a mandatory 15% from any US source dividends, 30% if your account in not documented with appropriate ID or W8-BEN.

[specialfx3000]

The fx conversion is done by the firm.
Are you holding a US security or a canadian one?
Divs from canadian co's are not subject to a withholding tax if you reside in canada.
Conversly, if you hold a US stock and it pays a dividend, there will be a withholding tax. It is a mandatory 15% from any US source dividends, 30% if your account in not documented with appropriate ID or W8-BEN.

Hi there,

Yes, I am in the exact situation.

US Stock where 15% was withheld.

Highflyer said: It is fully deductible on your Canadian tax return as 'foreign tax paid'.

But the amount withheld was in US... how do I enter it on my Canadian tax return?

[15-20_God]

Highflyer said: It is fully deductible on your Canadian tax return as 'foreign tax paid'.

But the amount withheld was in US... how do I enter it on my Canadian tax return?

The amt withheld will show on the T5 that is issued. Convert the amt from usd to cdn.

[taxguru]

This is a fairly difficult question for most people.

I have some canadian stocks in my Ameritrade US account in Canada traded on the NYSE. I was recently paid dividends in US dollars minus the 15 percent withholding tax.

1. Is the dividend originally payed in Canadian dollars and converted to US dollars?...thereby a slight conversion penalty.

2. How do you get back the dividend withholding tax?

(NOTE: When I wrote my original response, I assumed that it was Canadian withholding tax, not US tax. It's not clear above what country required the tax to be withheld. I assumed that Canada required the tax to be withheld because the shares were listed on the NYSE. On reflection, it could have been US tax because the receipient was not a US resident. This fact needs clarification for an appropriate response. My answer below is base on my original assumption)

If you have an Ameritrade.ca account and you have indicated that you are resident in Canada, no CANADIAN tax should have been deducted from the dividends in the first place. Ameritrade should be correcting this and you would have to correspond with them to get your money back.

Unfortunately you cannot claim this tax as a foreign tax credit on your Canadian income tax return, because it is not a tax paid to a foreign country.

You should also receive a T5 indicating that the dividends were paid by a Canadian corporation so you can get the dividend tax credit. I suspect, however, that if foreing tax was withheld, Ameritrade is treating you as a US resident, in which case, you would receive an NR4 tax form.

Again the remedy requires you to get Ameritrade to correct your status in their records.

[i6s1]

It is a mandatory 15% from any US source dividends, 30% if your account in not documented with appropriate ID or W8-BEN.

I have stock in my (American) company held in an american account. How do I get an appropriate ID or W8-BEN? Also, I get my dividends reinvested if that makes any difference.

[j_dubaya]

(NOTE: When I wrote my original response, I assumed that it was Canadian withholding tax, not US tax. It's not clear above what country required the tax to be withheld. I assumed that Canada required the tax to be withheld because the shares were listed on the NYSE. On reflection, it could have been US tax because the receipient was not a US resident. This fact needs clarification for an appropriate response. My answer below is base on my original assumption)

If you have an Ameritrade.ca account and you have indicated that you are resident in Canada, no CANADIAN tax should have been deducted from the dividends in the first place. Ameritrade should be correcting this and you would have to correspond with them to get your money back.

Unfortunately you cannot claim this tax as a foreign tax credit on your Canadian income tax return, because it is not a tax paid to a foreign country.

You should also receive a T5 indicating that the dividends were paid by a Canadian corporation so you can get the dividend tax credit. I suspect, however, that if foreing tax was withheld, Ameritrade is treating you as a US resident, in which case, you would receive an NR4 tax form.

Again the remedy requires you to get Ameritrade to correct your status in their records.

You are subject to US Withholding tax on dividends paid on US Companies. Ameritrade would not charge you withholding tax on dividends paid from Canadian corporations that are interlisted. As a Canadian resident, you are subject to the preferred withholding tax rate of 15% (vs. 30% for non-residents of the US)

[j_dubaya]

Wow thanks! The help desk guy had no clue at Ameritrade.

The reps there are not allowed to answer tax questions, not matter how simple they may seem. They are an online broker and can't give tax advice.

[taxguru]

You are subject to US Withholding tax on dividends paid on US Companies. Ameritrade would not charge you withholding tax on dividends paid from Canadian corporations that are interlisted. As a Canadian resident, you are subject to the preferred withholding tax rate of 15% (vs. 30% for non-residents of the US)

We know that the dividends were paid by Canadian companies, so are you implying that it was Canadian tax withheld?

[Arrow]

The fx conversion is done by the firm.
Are you holding a US security or a canadian one?
Divs from canadian co's are not subject to a withholding tax if you reside in canada.
Conversly, if you hold a US stock and it pays a dividend, there will be a withholding tax. It is a mandatory 15% from any US source dividends, 30% if your account in not documented with appropriate ID or W8-BEN.

Can you get that 15% back somehow?

[j_dubaya]

We know that the dividends were paid by Canadian companies, so are you implying that it was Canadian tax withheld?

AMTD Canada will not withhold any tax on income declared by a Canadian company.

What stock are we talking about ? that might help. For example, if it was TD Bank (trading on NYSE) paying a dividend, there would be no withholding.

[15-20_God]

Can you get that 15% back somehow?

no

[15-20_God]

I have stock in my (American) company held in an american account. How do I get an appropriate ID or W8-BEN? Also, I get my dividends reinvested if that makes any difference.

doesn't make any diff if the divs are reinvested. If you're being charged 15% withholding then there's nothing else you need to do. Otherwise call your broker or fill this out and send it to them. There may be additional requirements depending on circumstances.

http://www.irs.gov/pub/irs-pdf/fw8ben.pdf