Filling out a W-8BEN -- how?

[pitz]

My broker (IB) has requested that I fill out and file with them IRS Form W-8BEN.

As a Canadian citizen, with no ties to the United States (aside from being a periodic visitor, and investor), what do I need to put on this form:

http://www.irs.gov/pub/irs-pdf/fw8ben.pdf

In particular, Question #10 is of concern. I know Canada/USA have a tax treaty, but under what article is the withholding defined, and what explanation can I offer for eligibility under the treaty article?

Thanks. Hopefully someone else has dealt with this.

[Norbert Schlenker]

The treaty entitles you to withholding rates of

15% on dividends (Article X)
10% on interest (Article XI)
0% on capital gains (Article XIII)

You are entitled to those rates because, under the definitions made in Articles III and IV, you are a person resident in Canada.

NOTE: Your Canadian citizenship is irrelevant. Do not mention it.

[Bylo Selhi]

FWIW, the only part of Part II I've ever filled out on a W-8BEN is 9(a) to indicate that I'm a Canadian resident. I've never had any problems with incorrect withholding tax rates.

[FrostedGlass]

The official instructions are here.

My version, assuming an individual (Note IANAL and other disclosures to keep me out of jail and to keep the LSUC happy). If this is for a corporate entity or something more complimicated then consult your accountant and/or counsel.

Part I:
1. Name - fill it in
2. Skip for individual
3. Check as appropriate - likely "Individual"
4. Residence address - fill it in
5. Mailing address - skip unless different from residence
6. Skip
7. Skip
8. Skip

Part II:
9. As Bylo says check a. and put word "Canada" on the dotted line (I'm assuming you are resident in Canada for this). Don't check any others.
10. Skip

Part III:
11. Skip

Part IV:
Sign name and date, put word "Self" on the far right dotted line asking capacity.


Done. Send back to broker and keep copy for your files.

[IdOp]

Part I:
...
7. Skip
...

Field 7 is the "Foreign tax identifying number, if any (optional)". (Although the instructions, to their ambiguity, don't say optional.)

Are there any reasons not to put the Canadian S.I.N. in there?

[AltaRed]

Are there any reasons not to put the Canadian S.I.N. in there?

I never have in all the W-8BENs I have every filled out over the years and IRS really has no need for it. The less info they have, the better.

[Norbert Schlenker]

The less info they have, the better.

True, but if you think the IRS doesn't know your SIN (or CRA your SSN) already, you should read the Mutual Assistance clauses in the tax treaty.

[AltaRed]

The less info they have, the better.

True, but if you think the IRS doesn't know your SIN (or CRA your SSN) already, you should read the Mutual Assistance clauses in the tax treaty.

Oh, I know that... but they have to make the effort to find out. I am not going to help.

[Rickdl]

Recently I purchased a small amount of stock for my son (who's not even a year old). I realize (or at least think) I'll still be taxed on any dividends that stock has until he's 18 (I think?). I don't really care about that, I.e. being taxed on his income, but would still like more direction on how that works if someone can fill me in on that.

But my main question is I recently received a W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding form for the stock. More commonly referred as a "W-8BEN".

What do I do with it in terms of filling it out? It has a section for "Signature of Beneficial owner or authorized signatory" and also "Capacity in which acting". The stock is registered to my son's name not mine (as I wanted). Can I sign it? If so, what do I put under Capacity in which acting. Hoping I don't have to get a power of attorney or other complicated paper work just to buy shares for him.

Btw the stock also has a DRIP, which just has a signature box, date and daytime phone #. Could I also sign that? My signature's fairly sloppy so I doubt they'll know it wasn't my son that signed it, but obviously i don't want to do anything illegal or something that's going to cause problems in the future.

[SoninlawofGus]

Not exactly definitive, but see the last line: http://www.rbs-sharedealing.co.uk/forms ... _notes.cfm

I believe this form never goes to the IRS but rather stays with your bank.

[Rickdl]

Thanks, last line on that url has

Designated Accounts
For designated accounts, one form must be completed by the named account holder, and another form is to be completed on behalf of the minor and signed by their parent/guardian

but not sure if that means if there should be 2 copies, and if it does, who's the named account holder? And do I put in "Parent" under Capacity in which acting then?

[Bylo Selhi]

Not exactly definitive

From the horse's mouth: Instructions for Form W-8BEN although I couldn't find anything on point. However this, from a discussion of a draft revision, may be useful, "Parents and guardians of minor children may sign for them, and should indicate their status on the capacity line in the signature block." That's what I would do.

I believe this form never goes to the IRS but rather stays with your bank.

Or in the case of a DRIP, the transfer agent who is located in the US.

the stock also has a DRIP, which just has a signature box, date and daytime phone #. Could I also sign that? My signature's fairly sloppy so I doubt they'll know it wasn't my son that signed it, but obviously i don't want to do anything illegal or something that's going to cause problems in the future.

What concerns me is that transfer agents insist on Medallion Signature Guarantees. I have no idea what problems that may create in the future should you or your son wants to sell/transfer the stock. You may want to ask the transfer agent or look at their website.

[paper prophet]

For an indiviually held professional corporation, should 9c also be checked on the W-8BEN? 9c states:

"The beneficial owner is not an individual, derives the item (or items) of income for which the treaty benefits are claimed, and, if
applicable, meets the requirements of the treaty provision dealing with limitation on benefits".

I read this as "the corporation is not an individual, but wants to be eligible for preferential tax treatment as set out in the US-Canada tax treaty" (and I admit a could easily be reading this incorrectly. I find this language complicated and unclear).

[Operabob]

Are there any reasons not to put the Canadian S.I.N. in there?

Yes, it's called identity theft.

As a Canadian only give your SIN to institutions legally entitled to it, essentially:

a) medical
b) financial institutions reporting for income tax purposes

As foreign Corps aren't reporting to the CCRA don't give it.

If you have something like $500,000 (???) in US investments (stock, real estate) then you'd have to apply for a US taxpayer number and you'd give that.

OB

[Doug]

I have an account with Vanguard from the time that I worked in the USA. Vanguard states "If completing the form for an IRA or qualified plan account, you must have a U.S. taxpayer identification number to be eligible for treaty benefits in Part ll of the form...If you have an IRA or a qualified plan account, you must check this box (that refers to 9b)...The IRA requires that you submit evidence supporting foreign residency when any of the following conditions apply:
Your Vanguard account registration indicates a residence address or mailing address in the United States
The country you named on Form W-8BEN in Part l, line 4, differs from the country named in Part l, line 5.
You provide a U.S. permanent address in Part l, line 4 of Form W-8BEN
You provide a U.S. mailing address in Part l, line 5 of Form W-8BEN.
You provide a mailing address at a financial institution in Part l, line 5 of Form W-8BEN
You provide an "in care of" address in Part l, line 5 of form W-8BEN.
You provide a post office (P.O.) box number in Part l, line 5 of Form W-8BEN

I write this to point out that filling out form W-8BEN may not be as straightforward as one thinks.

[jay]

I just got my investment account transferred to RBCDI last month (lured by the 1% cashback bonus) and I hold US securities in it.

RBCDI just placed a restriction on the ENTIRE account because they did not receive my signed W-8BEN form (related to US tax withholding). I can sell CAD and US stocks, but I cannot buy ANYTHING.

Do other brokers do this and does it make any sense? I don't understand why the ENTIRE account is not restricted, i.e. I cannot buy Canadian stocks.

Thanks

[twa2w]

Yes all brokers do it as far as I am aware. There is an alternate to providing the W8Ben form that would allow you to trade, having to do with what ID you provide, but it doesn't give you the the tax benefit on witholding tax

Cheers
J

[Bylo Selhi]

RBCDI just placed a restriction on the ENTIRE account because they did not receive my signed W-8BEN form (related to US tax withholding). I can sell CAD and US stocks, but I cannot buy ANYTHING

Yes all brokers do it as far as I am aware. There is an alternate to providing the W8Ben form that would allow you to trade, having to do with what ID you provide, but it doesn't give you the the tax benefit on witholding tax

Something doesn't add up here.

When I transferred taxable and RRSP accounts to RBCDI I indicated that I didn't need US trading. I included a photocopy of my driver's license but no W8-BEN. (I have no other business with RBC so they don't have any other ID or similar documentation on file.)

My taxable account has two sub-accounts, one CA and the other US. I haven't tried to trade on the US side. I have both bought and sold stocks and mutual funds on the CA side with no hassles whatsoever.

A couple of weeks ago, when I enquired about the status of my wife's transfers (also no US trading, photocopy of DL, no W8-BEN, no other business with RBC) the agent said they were still vetting her application. I asked if they'd received the transfer forms, copy of DL, etc. that were included with the main application. He said yes. Then he added that the DL was superfluous because we aren't trading in the US (!?)

Granted that all of our experiences with RBCDI are anecdotal but they're also very inconsistent. (And in our case they're also in violation of FINTRAC, but that Gord Nixon's problem, not mine.)

[Raul]

Have held a few US stocks/ETFs for several years. However, didn't submit W-8BEN form intially, thus a 30% withholding tax was applied to dividend distributions over a 2+ year period.

Question: Is it possible to re-coup the taxes? Thanks

[Norbert Schlenker]

If the withholding was inside an RRSP, probably not.

If in a taxable account, you can file a 1040NR and request a refund of the amount above the 15% specified in the treaty. That may require updating any foreign tax credit you claimed on your T1.

[Raul]

....you can file a 1040NR and request a refund of the amount above the 15% specified in the treaty

Thanks!

[Doug]

The following may be useful to others. I was filling out the IB Brokers application form on line. I filled out 9; then I filled out 10 with the information that Norbert generously provided. It didn't work. I phoned IB up. I was told that the problem was that I was filling out 10. If one fills out 9, you don't have to fill out 10.