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I'm new to investing in U.S. securities. As a Canadian, how will I be taxed on all types of U.S. income?


I'm new to investing in U.S. securities. As a Canadian, how will I be taxed on all types of U.S. income?

Assuming you are not a U.S. resident for tax purposes (or a dual Canadian - US citizen), then:

Interest income from U.S. sources is subject to a U.S. withholding tax of 10% under the U.S. Canada treaty (or in certain cases, exempt from U.S. tax under U.S. law, if it meets the definition of portfolio interest-see links below).

Dividends income from U.S. sources is subject to a U.S. withholding tax of 15% under the U.S. Canada treaty.

Capital gains are exempt from U.S. tax (except as related to (1) U.S. real estate income or (2) income from ownership of a U.S. business from U.S. sources).

U.S. real estate income including capital gains (held directly or via a partnership or corporate investment) and partnership income from a U.S. business from U.S. sources is subject to U.S. withholding at a 35% tax rate and will require the filing of an annual calendar year Form 1040-NR. Additional taxes might be due (or a refund received) on the filing of the return.

Partnership income from a U.S. business from U.S. sources are subject to U.S. withholding at a 35% tax rate and will require the filing of an annual calendar year Form 1040-NR. Additional taxes might be due (or a refund received) on the filing of the return.

U.S. taxes withheld, or additional U.S. taxes paid (less refunds) on filing of Form 1040-NR should be allowed in computing a foreign tax credit on your Canadian income tax return (T1 for individuals, seehttp://www.cra-arc.gc.ca/tax/individuals... Source(s): http://www.fin.gc.ca/treaties/usa_e.html... (Articles VI, VII, X, XI, XII)
http://www.irs.gov/pub/irs-pdf/i1040nr.p...
http://www.irs.gov/businesses/small/inte... (from a U.S. payors point of view).
http://www.gtlaw.com/pub/alerts/2006/060...
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