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Provident Energy Ltd. Message Board

  • junkbond_on_my_mind junkbond_on_my_mind Feb 16, 2011 5:38 PM Flag

    2010 tax withholding

    Does anyone know how to recover the 15% Canadian tax that was withheld on the return of capital portion of the monthly dividend. I just received my 1099 from Wachovia and they withheld the tax on both the dividend and the distribution. Talked to Investor Realtions and requested that they try to deal with the issue on their site. Any thoughts?

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    • file form 1116

    • For US residents that hold this in an IRA, there should be no withholding, according to the US/Canada tax treaty.

      The problem is most likely with the way your broker has the account coded with the Canadian DTC. It is the DTC that withholds the taxes on distribution.

      Your account should be coded as "IRA001" with DTC. Once your broker gets that done, withholding should stop.

      There is a form that Revenue Canada has to recover those taxes withheld. can't put my finger on it right now, but look at Revenue Canada website.

    • "Junkbonds"

      Contact your Wachovia broker or whomever you're dealing with and tell them you want to sign the document that says "You don't want them" to with hold the tax.
      "I did" (I use Wells Fargo) and it isn't being with-held.

      "Codebuddy" is right

    • I am getting it back in the retirement account. See followup thread on update on return of capital.

    • "I understand that - but why withhold on the return of capital."

      Understand what you are saying and it's a valid point. However there is no chance to get it back, other than through the foreign tax credit if in a taxable account. So you might as well save your energy. The broker will not be able to do anything.

    • Talked to my Wachovia person on this. The tax department agrees with me and they are looking at redoing the 1099 and retracting from the Canadian govt the withholding on the return of capital portion to return it to my account. This is a problem for both the retirmement and non retirmement accounts. Part of the problem appears to be the late reporting of the return of capital vs regular dividend. I will update when I know more.

    • I have Wachovia researching this the withholding that occurred on the return of capital portion of the dividends. It does not really matter what country you are in, I am aware of no circumstances where the taxing government taxes a return of capital. When Wachovia gets me an answer I will post it for those that are interested.

    • The canadian withholding is a result of a tax treaty with Canada. It is deductible (or partly) based on you calculations performed on IRS form 1116 ( foreign tax credits). Any unused portion is carried over to the next year. It is possible that you may never deduct 100% of this withholding. There is no provision for relief for withholding on return of capital.
      Investments held in IRA lose this deduction.

      I am long in this investment.

    • Maybe this is a Wachovia problem since my Feb dividend had the tax taken out.

    • I understand that - but why withhold on the return of capital. Also, just looked at my Feb dividend in my IRA -
      Wachovia is still withholding the 15% - I did'nt think that this would happen under the new structure?

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