# non us person paying tax on us stock div.?



## xcaret (Feb 13, 2010)

Years ago I bought some Berkshire hathaway stock ,and just left it in the form of a stock certificate. Now I'm told BRK may be paying a dividend as the money is piling up and nothing to buy.. I filed a W8-BEN when I bought these.
Last year I heard mention that americans were going to be taxed on all dividends ,but since BRK doesnt pay any I paid little attention.. Since then I have been told the tax didnt aply to non americans holding american stock...Can anyone set me straight on this?
Neil


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## warp (Sep 4, 2010)

NEIL:

The US ( through your brokerage ), will withhold 15% US tax on any dividend you get from a US company.

You can use this by filing ,with your taxes, a foreign tax credit, to the extent that canadian taxes are owing....( you cannot use US taxes paid to get a refund)
Look it up at CRA.GC.CA
Get the forms, fill them in and send them with your tax returns to get credit for US taxes paid. This insures you dont pay taxes twice on the same income.
Remenber to fill in the PROVINCIAL form too, if you can use the US taxes there as well.


By the way, it is highly doubtfull that Berkshire will pay a dividend any time soon anyway.

The only time that has ever happened was when Warren Buffet had gone to the washroom , and the board approved a dividend in his absense.
I think that was in the late 60's.
He has said that will never happen again.


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## Eclectic12 (Oct 20, 2010)

warp said:


> NEIL:
> 
> The US ( through your brokerage ), will withhold 15% US tax on any dividend you get from a US company.
> 
> ...


I agree the dividend is not likely but haven't been watching Berkshire-Hathaway ... *grin*

However, between articles I've seen posted and personal experience - the default US with-holding tax is actually 30%. 

Filing the W8-BEN form, whether you or your broker on your behalf does it - is what reduces the with-holding tax to the treaty amount of 15%.

Yes - the foreign tax credit filed with your taxes will help with the 15% but if the paperwork isn't filed so that 30% is withheld, the additional 15% is gone.

This is for non-registered accounts.

RRSPs are exempt and so far, I haven't seen any articles reporting issues but I'm not sure how closely people are checking.

The TFSA is a strange case as it is not recognized by the tax treaty so a minimum of 15% with-holding is charged by the US *and* since it is Canadian tax-free, the foreign tax credit is not available.


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## cardhu (May 26, 2009)

Neil ... dividends from BRK would be treated exactly the same as dividends from any other US companies ... it would be subject to a withholding when paid to a NRA (non resident alien) ... the rate for Canadian residents is 15% if you’ve completed the necessary paperwork, 30% otherwise ... US shares held inside an RRSP are exempt from withholding, but if you’re holding the certificate, then I assume its not in an RRSP. 



> _if the paperwork isn't filed so that 30% is withheld, the additional 15% is gone. _


NO, the additional 15% is not gone ... any amount withheld in excess of 15% can be deducted from income ... its not as valuable as the credit, but better than nothing.


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## Cal (Jun 17, 2009)

I think the BRK dividend news is wishful thinking on the part of some shareholders.


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## Eclectic12 (Oct 20, 2010)

cardhu said:


> [ ... ]
> 
> Electic12 -> ... if the paperwork isn't filed so that 30% is withheld, the additional 15% is gone.
> 
> NO, the additional 15% is not gone ... any amount withheld in excess of 15% can be deducted from income ... its not as valuable as the credit, but better than nothing.


True ... thought I'm kicking myself for not filing the paperwork to get to from the default 30% down to the 15% earlier.

( ... if only I'd found CMF earlier ... *grin*)


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## warp (Sep 4, 2010)

Just a quick post to AGAIN say how ludicrous, and seemingly incomprehensible our tax system is!

( And they say the US system is even worse!!)

We really need a complete and utter overhaul of this system to make it reasonably simple for regular taxpayers to understand.

Im not holding my breath, though.

I have long argued that some sort of "flat tax" system would work out better for everyone involved, including the government, as Im convinced tax revenues would actually increase under such a system, ( by eliminating under-the-table income), while being fairer to all.


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