Form W-8BEN is a tax document used to certify that the country of residence for tax purposes is not the United States. It is required because Canada and the United States have entered into an intergovernmental agreement under which Canadian financial institutions must provide this information.
The completed W-8BEN form confirms:
1) That you are not a resident of the United States;
2) That you own the income to which the form relates;
3) It is also used to take advantage of a reduced rate of withholding tax by virtue of being a resident of a country which has a tax treaty with the United States.
Why do I have to complete the W-8BEN form?
Due to agreements between the Canadian and US governments, account holders are required to file Form W-8BEN even if they do not hold any investments in the United States. Additionally, the U.S. Internal Revenue Service (IRS) requires U.S. securities brokers to obtain a W-8BEN form from all holders of a Tax Free Savings Account (TFSA) or TFSA. a Registered Education Savings Plan (RESP) who wish to trade in US securities.
Note: If you are a citizen or resident of the United States (or if you opened your account in the name of a United States partnership, corporation, estate or trust), you would file Form W-9 instead of Form W-8-BEN.
What benefits can I get from it?
If you certify that you are a resident of Canada, Form W-8BEN allows you to claim treaty benefits through which the rate of withholding tax on U.S. source income (dividends from U.S. corporations or interest from U.S. sources). U.S. Fixed Income Investments) that you may receive in your Account will be reduced.
This is a significant advantage, as the withholding tax rate is normally 30%. By filing an updated Form W-8BEN, you could benefit from a reduced tax rate of either 15% on dividends or 0% on interest.
What happens if my W-8BEN form expires?
If your Form W-8BEN expires and you do not file another, any U.S. source income you receive will be subject to withholding tax of 30%. In addition, your account may be subject to restrictions.
Have a question? Contact Olivier Wagner. 1040 Abroad
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