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HMRC internal manual

International Manual

DT Agreements: Canada - Income from a UK source paid to a resident of Canada

UK dividends paid to a resident of Canada - portfolio investor (Article 10)

The convention provides for payment of the excess of UK tax after retention of 15% ofthe aggregate (of net UK dividends plus tax credit) to the beneficial owner of thedividends who is a resident of Canada. But for dividends paid since 6 April 1999 there isno tax credit to pay. See INTM343520.

Dividend Stripping

The anti-dividend stripping provisions of Article 10(7) apply where a resident ofCanada:

  • does not bear Canadian tax on the dividends derived from a company which is a resident of the UK, and
  • owns more than 10% of the class of shares in respect of which the dividend is paid

The answer to the relevant question on the dividend claim form should tell you when youneed to consider these provisions of the convention.

INTM343550 tells you more about dividend stripping.