Tax on Dividends from U.S. for Canadian Residents

[vmanasvi]

I am a new Canadian Resident, non-resident U.S. Alien - I own 2 different companies a C-Corp in the U.S. and a Federal CCPC in Canada. If the U.S. company pays out dividends -

1. What is the tax treatment of those dividends in Canada?
2. Do I need to file for any taxes in the U.S. as well?

[nelsona]

1. The US dividends are treated like ORDINARY income, fully taxable in Canada (no gross-up and no dividend tax credit).
2.There are many factors that would affect how the dividends are taxed in US, depending on how they are paid, and what king of permanent establishment the company has.

[nelsona]

Whatever tax one eventaully pays in US would then be used as a foreign tax credit on your Cdn return, upto 15%.

[ND]

and don't forget C corp filing 1042 series of 3 forms, the treaty reduced rate of w/h of dividends paid to Canada can be either 15% or 5%, the latter where 10% ownership exists.