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Posted on January 1, 2013

Are you a Canadian Corporation considering becoming a member of a US Partnership?

Written by aptax | @AvnerPolatsek

Foreign persons are subject to U.S. tax at a 30% rate on certain income they receive from U.S. sources. The withholding agent (US Partnership) is required to withhold 30% of income at source.

If you are not a US citizen, you may provide form W-8BEN to the withholding agent to:

• Establish that you are not a US citizen.

• Claim that you are the beneficial owner of the income for which form W-8BEN is being provided or a partner in a partnership subject to section 1446.

• If applicable, claim a reduced rate of, or exemption from, withholding as a resident of a foreign country with which the United States has an income tax treaty.

In any case, if you file the appropriate forms and schedules properly, you will avoid double taxation under the US/Canada tax treaty.

Cross border tax issues can be quite complex, please call Avner Polatsek for a free initial consultation.