Debt securities – rates, eligibility, availability of relief etc. – Canada
Withholding tax
| Standard rate of withholding tax: | 0% - 25% | Holding requirements / restrictions: | No |
No withholding tax is imposed on interest from Canadian debt securities held in Clearstream Banking and interest payments are systematically paid gross with no action required from the client or beneficial owner to obtain exemption.
25% withholding tax may however be applicable in the event that a debt security distributes taxable dividends.
25% withholding tax may as well apply in very rare cases to:
- A “Related” non-resident not dealing “at arm’s length” with the issuer for interest paid on the corporate bonds and on government bonds issued before 15 April 1996;
- “Participating interest” amounts from Canadian sources paid to a non-resident.
Important note for participating interests and “related” non-residents not dealing “at arm’s length”:
If the underlying final beneficial owner is subject to the above-mentioned taxation, then, on request from the client, 25% withholding tax may be applied. 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.