W-8Ben Part 2-#10

[moi]

As a Canadian filling this out, should I do #10? If I purchase Canadian stocks paying dividends in my IRA, is there an Article and Paragraph I could quote, that would bring down the withholding rate from 30%? Thank you!

[nelsona]

As you probably know, the withholding tax is imposed by, and paid to, Canada, not US.
Without the treaty, the tax would be 25%.
At a minimum, if you refer to Article X.2(b) of the treaty, this should reduce the withholding to 15%.
For Cdn stocks held in an IRA or other retirement account, that withholding is *supposed* to be waived entirely, but many brokerages do not inform the Cdn corporation that the stocks are being held in an IRA, thus they withhold 15%.

It should never be 30%. 30% is what the IRS taxes non-residents for US-sourced income (unless affected by treaty). Not this case at all.

[moi]

Thank you.
Yes, my error 25% tax.
AFter having this conversation with Charles Schwab, they informed me that I need to contact the Canadian companies that I invest in; within my IRA, that they use a witholding company...I cannot find any information on this subject. That, letting them know I am a Canadian resident, they would lower my tax rate!? Is that true?
Am I beating a dead horse?
TYIA

[nelsona]

It would be better if you could fix it, as it is impacting the performance of your IRA.

However, simply keep track of the Cdn tax withheld, and include it on your Cdn tax return along with any other withholding, so it isn't "lost".