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Canadian Stocks/Canadian Withholding on Roth IRA dividends

Expert: Steven Taylor - 7/22/2009

Question
My brokerage recently switched its clearing broker. Since this change, it has been withholding 25% rather than the prior 15% on my Canadian Trust dividends.
I fully accept the 15% as being non-recoverable and the price one must pay, but 25% is ridiculous and I know of no justification.
Can the broker possibly be correct? The companies are outfits like Keyera Facilities, AltaGas, Macquarie Power, Chemtrade Logistics.

Answer
Robert, I agree - the 15% is the law, and the 25% is too much. The only reason that I know of that a broker can withhold 25% is if they do not have your Social Security Number/Tax ID, or have an incorrect number that has not been verified. Therefore, I suggest you contact your broker and have them give you the reason for the change in withholding - if it is an incorrect or missing number, it is very easy to correct and they should be able to quickly return the excess 10% withholding.

Questioner's Rating

Rating(1-10)	Knowledgeability = 10	Clarity of Response = 10	Politeness = 10
Comment	Steve, Thank you very much for your prompt response. I am a CPA myself, but claim no expertise in Canadian Tax matters. You have given me reassurance which I needed since the tiny outfits I am dealing with are Vanguard and its miniscule clearing broker, an obscure outfit known as JPMorgan Chase.