Certain Canadian Corporations May Unknowingly be Subject to U.S. Federal Backup Withholding and Reporting Requirements With Respect to Dividend Payments
Canadian corporations making dividend payments should ensure that they are compliant with U.S. federal backup withholding and reporting requirements to avoid potential U.S. federal income tax issues. Generally, a Canadian corporation making a payment of dividends aggregating USD$10 or more to another person during the calendar year is subject to the U.S. federal backup withholding and reporting regime. However, a dividend payment by a Canadian corporation is excluded from these rules if it is: from sources outside the United States; by a non-U.S. payor or a non-U.S. middleman; and paid and received outside the United States. For purposes of this discussion, a reference to a “Canadian corporation” does not otherwise include a Canadian...
