Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
This is in reply to your letter of February 9, 1989 in which you asked a question about Canadian withholding tax deducted from dividends paid by a Canadian company.
XXX
The Canadian Income Tax Act (the "Act") requires that a 25% withholding tax be deducted from taxable dividends that are paid or credited by a Canadian company (such as XXX) to a non-resident. This means that the 25% tax must be withheld if the funds from the dividends
- 1) are paid to the non-resident, or
- 2) credited to the non-resident (e.g. recorded in the paying corporation's records as being payable to the non-resident).
In your situation the XXX would be considered paid to you if they
- 1) are sent to you in XXX, or
- 2) are kept in Canada for your use.
As they are considered paid to you in either of these situations the 25% tax would have to be withheld. In addition,you would not be exempted from paying withholding tax on your XXX dividends if you kept the money from the dividends in Canada and reinvested it in more XXX shares.
We trust this will be of assistance to you.
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© Her Majesty the Queen in Right of Canada, 1989
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© Sa Majesté la Reine du Chef du Canada, 1989
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