QUESTION I-69
Withholding Tax - Dividends
Paragraph 2(a) of Article X of the Canada-U.S. Income Tax Convention reduces the rate of withholding tax on dividends if the beneficial owner of the dividends is a company which owns it beast 10% of the voting stock of the company paying the dividends. Is this 10% test determined by considering the number of votes, the number of voting shares or in some other manner?
DEPARTMENT'S POSITION
For purposes of paragraph 2(a) of Article X of the Canada-U.S. Income Tax Convention, it is the Department's opinion that the 10% test is determined by reference to the number of issued and outstanding shares of the company which entitle the holder to a vote.
Prepared by: R. Biscaro