Canadian equities – Relief at source – Eligibility, documentation, deadlines
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 |
| Resident of a DTT country (non-resident according to Form NR301) a | Tax treaty or 25%, whichever is lower |
Non-resident tax-exempt entities | 0% |
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.
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).
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:
Clients 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 and depending on if the Clearstream Banking client is a Swiss intermediary bank, 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 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.
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
- Luxembourg
- Oman
- Spain
- Sweden
- Switzerland
- United Kingdom
(The above list may not be comprehensive and is subject to change.)
and, upon request:
- List of Beneficial Owners – Canadian Securities;
- CRA Form NR301 (from clients acting as intermediary);
- Certificate of Residence;
- Any other tax documentation as required from time to time.
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").
Swiss intermediary banks:
- One-Time Certificate – Canadian Equities and Trust Instruments – Swiss Intermediary;
- Per-Payment Instruction.
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:
| Document | Deadline for receipt by Clearstream Banking |
One-Time Certificate – Canadian Equities and Trust Instruments (various versions) | Three business days before the first dividend payment date by 10:00 CET |
Per Payment Instruction | Three business days before the dividend payment date by 10:00 CET |
CRA Form NR301 | Own assets: Three business days before the first dividend payment date by 10:00 CET Client assets: Upon request |
Certificate of Tax Exemption | Three business days before the dividend payment date by 10:00 CET |
Letter from the pension plan | Three 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 plan | Three business days before the dividend payment date by 10:00 CET |
Certificate of Residence | Upon request |
List of Beneficial Owners – Canadian Securities | Upon request |
Positions for which clients have not submitted the requested documentation before the prescribed deadline will be taxed, through Clearstream Banking, at the maximum applicable rate.