Beneficial ownership and tax treaty benefits

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Beneficial ownership
Residence and eligibility for treaty benefits
Amounts payable to a non-resident agent or nominee/financial intermediary

The payee's name and address may no longer be the only information needed to establish that treaty benefits apply.

To apply the correct rate of withholding, you should have enough recent information to prove that the payee:

If you are not sure whether all three criteria are true, ask the payee to fill out and give you either the applicable form below or equivalent information:

Beneficial ownership

Generally, you can accept that the payee is the beneficial owner of the income, unless there is reasonable cause to suspect that the payee is not the beneficial owner.

Although this list does not cover all possibilities, it is reasonable to question whether the payee is the beneficial owner in the following situations:

If the payee is an insurance corporation or pension trust, the CRA will accept that the payee is the beneficial owner of amounts paid to a non-resident. However, that corporation or trust has to invest only for itself and include the amounts when it calculates its revenue.

Residence and eligibility for treaty benefits

The payee, partnerships or other flow-through entities with non-resident partners or members can give you one of the forms NR301, NR302, or NR303, or the information requested in these forms to certify that they are:

Even if you do not get Form NR301 or the information requested in the form to support the beneficial owner's country of residence and eligibility for tax treaty benefits, you may apply a tax treaty rate if all of the following are true:

Note

Collect additional documentation or Form NR301 if the treaty benefit applies only under certain conditions (such as when the amounts must be received in, taxable in or taxed in the country of residence).

In addition, do not request Forms NR301, NR302, or NR303 from the beneficial owner in the following circumstances:

The CRA issues a letter of exemption or written authorization to a non-resident for the following:

Amounts payable to a non-resident agent or nominee/financial intermediary

Non-resident agents or nominees who are holding securities on behalf of other non-residents must fill out and send an agent or nominee certificate, as described in Information Circular IC76-12R, Applicable rate of Part XIII tax on amounts paid or credited to persons in countries with which Canada has a tax convention to the payer or another upstream agent or nominee, when applicable.

It is understood that only the entity that directly pays the beneficial owner will have the address and identification information of the beneficial owner. The CRA expects that entity to maintain this information and not pass it up to a chain of intermediaries. The payer will only receive pooled information in the form of an agent or nominee certificate as described in IC76-12R.

Forms and publications

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