w-8ben: clear instructions anywhere?

Discussion in 'Retail Brokers' started by MuscleHead, Nov 19, 2006.

  1. Hello,

    I live in Canada.

    I've been asked to update my w-8ben with TD. This prompt me to do a bit of searching for clear instructions, which I wasn't able to find anywhere.

    I did find a post that says that IB withholds 15% from dividends if they have a proper w-8ben from you, and 30% if they don't. Is that still accurate? Is that true for all other brokers in Canada as well?

    Interestingly enough, TD says I can just send a photocopy of my passport/driver's license, and then I won't need to renew that (unlike the w-8ben, which needs to be renewed every 3 years).

    Assuming that I do fill out a w-8ben, what does it mean for it to be properly filled out? Do I have to specify that I should be getting a 15% withholding rate anywhere (like Part II, #10)?

    I can't believe that it's so hard to find these clear instructions anywhere! Of course, maybe I just didn't search properly -- if you know of a place with clear instructions, please tell me.

    Thanks!
     
  2. I was going to add, "And don't just mention the instructions from the IRS -- those are anything but clear". But Giggollo beat me to it.

    I guess what I'm looking for is an example of a properly filled-out w-8ben. I'm sure 90% of Canadians should fill out exactly the same thing -- that's the example I'm looking for.
     
  3. It's a pain in the ass form and if you don't fill out properly they will return it to you as many times as needed and will lock your account if you don't submit it on time. Don't miss the cut or you will get your profits cut by 15%. You should have until end of year. Sorry I don't have a copy of it otherwise I'd email it to you but take care of it asap.
     
  4. Oh oh -- another question:

    let's say that I was given false information about the w-8ben, and that I thought that it was normal to be subject to a 30% withholding rate on dividends (even with a properly filled-out w-8ben). This goes on for a couple of years.

    Is there any way that I can get half (15%) of that back now?
     
  5. Jenna6

    Jenna6

    I am having the exact same problem today. I dont understand section II

    I am a canadian charging an American company for a purchase and have included taxes within the prices. They told me to claim that I am including the taxes in the price. What box would I check?

    Also, do they withhold any percentage because I included the taxes?
     
  6. Every Canadian resident trading a US account must supply one of 2 things:

    (1) US Tax ID

    or

    (2) One of 3 W8 forms.

    This is so that US residents cannot evade taxes by opening Canadian broker accounts.

    If you do so...
    There will be 15% withholding on dividends...
    If not... 30% withholding on ** everything ** which will make the account untradeable.

    You will NEVER get back any money withheld directly...
    But if you or your accountant file a proper tax return...
    Then you will get it ALL back in the form of a Tax Credit...
    Which is as good as cash for paying taxes you owe.

    This is an issue almost no one understands...
    Many brokers totally mismanage...
    And it's nearly impossible to get a straight answer from anybody...
    Unless you have a lawyer or auditor that is an expert.