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PowerShares Financial Preferred ETF Message Board

  • ltbhdollars ltbhdollars Dec 8, 2004 3:18 PM Flag

    Tug, On Taxation


    This is a developing investigation and I am still actively working an attempt at full understanding of everything that is happening here ... there have been several independent confirmations through different trusts that although NOT passed yet (maybe a flawed understanding on my part) that the trusts will begin withholding 15% of gross distributions to any non resident unitholder with the January 2005 distribution.

    So the first difference is IRAs and Roths will be seeing distributions reduced 15%. It is very unclear where IRS stands on any of this. Also have never known of any vehicle for US investor to recover a charge to an IRA/Roth so it probably will be lost opportunity/monies.

    Eventually, on TAXABLE ACCOUNTS, I believe IRS SHOULD (but being IRS may not) allow full 15% foreign tax credit input into the form 1116 calcs (including the currently disallowed ROC portion).


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    • ltbhdollars,
      I appreciate your input. The Canadian government has always imposed a 15% with-holding tax on all US taxable accounts. This is nothing new. Therefore, the first (and only) difference is that the Canadian government starts to with-hold 15% on US tax-deferred accounts. I believe they are doing this as a way to cut down on US investors. They feel that only Canadians should benefit from Canadian oil. But they have to be careful, because if they chase away too many American investors they stand to lose A LOT of tax revenue. They do this in cycles. I have been reading the message boards on PVX and PTF for years now and when they feel there are too many US unitholders, they raise a stink to see how many they can shake off. This too will pass. They will find ways to stall this "motion" for a LONG time.

    • Tug,

      Have never read of anyone who currently has recovered any improperly withheld ROC tax from Canada in prior years. Improper as defined by IRS and the form 1116.

      MuskieMuskie has been waiting one year, couple others whose names are long disremembered wrote earlier in 2003 they had been waiting two years.

      Muskiemuskie submitted only one trust as a trial case as he too recognized the large cost of the procedure, he also indicates his cost was $40 per line per trust per month and there may also be additional notary fees from broker for each entry.

      He hasn't paid these costs at last mention as he took position broker should pay it, again recognizing it as a lost battle.


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