Canadian trust instruments - Standard refund - eligibility, documentation, deadlines
Standard refund of withholding tax on income from Canadian trust instruments is available through Clearstream Banking for beneficial owners that are resident in a country that has a Double Taxation Treaty (DTT) with Canada and who qualify as non-resident according to Form NR301 (General), NR302 (Partnerships) or NR303 (Hybrid entities).
Standard refund is available to beneficial owners who are recognised as tax-exempt by the Canada Revenue Agency (CRA).
Eligible beneficial owners
Beneficial owners can apply for a standard refund of withholding tax on income from Canadian trust instruments as follows:
| Eligible beneficial owners | Rate applicable at source |
Residents of a DTT country (non-resident according to Form NR301 (General), NR302 (Partnerships) or NR302 (Hybrid Entities)) | Tax treaty or 25%, whichever is lower |
Tax-exempt entities | 0% |
In order to apply for a standard refund, beneficial owners must fulfil the respective documentation requirements.
Documentation requirements
For a standard refund of withholding tax on income from Canadian trust instruments, the documentation requirements are as follows:
For Residents of a DTT country who qualify as non-resident according to Form NR301 (General), NR302 (Partnerships) or NR303 (Hybrid entities) and Tax-exempt entities:
- Letter of Request to Clearstream Banking for Reclaim of Canadian Withholding Tax;
- Request for Refund from the Canada Revenue Agency;
- NR7-R Application for Refund of Non-resident Tax Withheld;
- Breakdown of Trust Instrument Components;
- Beneficial Ownership Affidavit with Registered Ownership (notarised);
- Credit Advice.
Plus, for Tax-exempt entities only:
- A Withholding Tax Exemption Letter issued by the CRA.
N.B.: In order to obtain the refund, beneficial owners may be required, upon request, to provide other supporting documention, such as CRA Form NR301, NR302 or NR303.
Form descriptions are presented according to the procedures available for relief and/or reclaim of withholding tax on income from Canadian trust instruments.
Statutory deadlines
The statutory deadline for reclaiming withholding tax using the standard refund procedure is two years after the end of the calendar year in on which the income was distributed.
Clearstream deadline for standard refund applications
Documentation for a standard refund of withholding tax on income from Canadian trust instruments must be received by Clearstream Banking at the latest three months before the statutory deadline.
All standard refund applications received after this deadline will be processed by Clearstream Banking on a "best efforts" basis. However, in such cases, Clearstream Banking will apply an extra charge and accepts no responsibility for request that have not reached the Canadian authorities by the date considered as being the statute of limitations deadline.
With respect to tax reclaims in general, customers are reminded that Clearstream Banking accepts no responsibility for their acceptance or non-acceptance by the tax authorities of the respective country. It is the customer’s responsibility to determine any entitlement to a refund of tax withheld, to complete the required forms correctly and to calculate the amount due.
When are refunds received?
The estimated time for receiving a standard refund is approximately 18-24 months from the date of receipt of the refund request.