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HMRC internal manual

Double Taxation Relief Manual

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HM Revenue & Customs
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Double Taxation Relief Manual: Guidance by country: Canada: Dividends

The Canadian tax deducted from dividends at the agreement rate of 15 per cent (5 per cent where a dividend is paid to a United Kingdom resident company controlling, directly or indirectly, at least 10 per cent of the voting power in the Canadian company) qualifies for credit as a direct tax (see INTM164030(c)). The reduction to the above rate is not given if the dividend is effectively connected (see INTM153110 fifth sub-paragraph) with a permanent establishment or fixed base which the United Kingdom resident recipient has in Canada.

Where a Canadian company pays a dividend to a United Kingdom company which controls, directly or indirectly, not less than 10% of the voting power in the Canadian company, credit may also be due for the underlying tax (see INTM164030(d)) (Article 21(2)(b)) if the dividend is not exempted.