I am new to POT. So I am not sure if the dividend is taxed by Canada before we in US get it. It is a hassle if that happens. Years back I owned Nokia and they taxed the dividend in Finland before I got it and then I had to reclaim the taxes in my US tax return. That can be a real hassle if the tax was deducted in an IRA. Companies based in UK do not get a dividend taken out before distribution in US.
Can somebody tell me the taxing status of POT dividend. Thanks in advance.
The US Canadian tax treaty states that when the dividend distribution is sent to an IRA the Canadian tax of 15% should not be taken out. You cannot claim the foreign tax on your 1040 since the dividend went into the IRA. You can talk to the brokerage house about this or your other option is to file a Canadian tax return to claim a refund for the foreing tax taken from you. You can call their tax authorities to find out the form. I believe it is a NPR-7 form.
There is a place on the 1040 to claim foreign taxes paid. You essentially receive some sort of credit for those taxes and the filing process itself is quite simple. If you itemize, I believe they can be included as a deduction, but I've never done that. I'm going to look into it next year.
as a canadian stock owner of POT i can tell you that i/we get taxed on it when the dividend is distributed. to the best of my knowledge, i do not believe it has to be declared as income on your taxes as you already paid taxes on it (were taxed) by the canadian gov't. i few years back i also owned NOK and that is exactly the same thing that happened with their dividend (before they cut it completely). but, tax rules in the US are different and i'm just providing a canadian perspective. in all honesty, it is not a hassle at all, but that's just my 2 cents. good luck...
"as a canadian stock owner of POT i can tell you that i/we get taxed on it when the dividend is distributed. to the best of my knowledge"
Better rethink that. You get the full amount of the dividend, but every year you get a T5 slip for the income. You include this income (and other info) on your tax return and unless very low income you will be expected to pay some tax. Not doing this? Watch out, the CRA cometh and they ain't on your side. GL
Thanks. I also researched and found that Canada taxes 15% of the dividends and one then has to claim them back in US Federal tax as foreign tax credit. The good thing about Canada is that if one holds the stock in an IRA, then Canada does not tax that dividend, unlike most countries which do tax it. The problem with IRAs holding a stock whose dividend is taxed is that one cannot reclaim those taxes in US Federal return.