Foreign withholding tax

Tax taken at the source from dividends paid by foreign companies.

Definition

US dividends paid to Canadian investors generally face a 15% withholding tax under the Canada-US tax treaty. The treaty exempts it inside an RRSP, but not inside a TFSA. Canada's foreign tax credit can offset it in a non-registered account.

Watch out for

This is general information. Rules depend on the account type and how the stock is held.

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