Taxation of Interest & Dividends

Interest - With the fifth Protocol of the Canada/US Tax Treaty now ratified, there is no longer any withholding on Canadian source interest paid to non-residents of Canada. However, this interest is taxable in the US and required to be reported as income there.

Dividends - In comparing the Canadian versus US taxation of dividends, Canada provides a 145% gross-up and the ensuing 18.97% tax credit. In the US, qualified dividends are taxed at a flat 15% tax rate (0% if in the 15% marginal tax bracket or below), while non-qualified dividends are taxed at your ordinary marginal income tax rates. For non-residents of Canada , dividends from Canadian mutual funds are subject to a 15% withholding at source. Again, because no withholding was taken does not mean there is none, you have to file a tax return and remit the 15% as stipulated in the Canada/US Treaty. Like interest, this income must be reported on your US return as a part of your "worldwide income", resulting in the potential for double taxation. Proper planning and tax preparation can recapture some or all of this 15% on your US return unlike interest income.

Income Tax Planning
	Tax Filing Requirements - which tax return do you file? In which country? When?
	Severing Ties With Canada - make sure you are not taxed in both Canada and the US!
	The Canada/US Tax Treaty - learn what it is and how it works.
	Taxation of RRSPs/RRIFs/LIRAs - landmines in waiting.
	Taxation of Interest & Dividends - potential for double tax.
	Taxation of Capital Gains - Which country taxes? Canada/US comparison.
	Taxation of Pensions - company pensions, OAS, CPP/QPP.
	Social Security Number - or Individual Taxpayer Identification Number, why you might need one.
	Taxation of Rental Properties - a paperwork nightmare how to apply.
	Foreign Tax Credit Planning - your ticket to avoiding double taxation.
	Key Differences - Canada/US comparison of tax brackets, deductions, and so on.