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previous page Previous Page: Publication 597 - Information on the United States-Canada Income Tax Treaty - Pensions, Annuities, Social Security, and Alimony
next page Next Page: Publication 597 - Information on the United States-Canada Income Tax Treaty - Charitable Contributions
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taxmap/pubs/p597-003.htm#en_us_publink1000104526

Investment Income 
From Canadian 
Sources(p2)


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Investment Income From Canadian Sources

The treaty provides beneficial treatment for certain items of Canadian source income that result from an investment of capital.
taxmap/pubs/p597-003.htm#en_us_publink1000104527

Dividends (Article X).(p2)


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For Canadian source dividends received by U.S. residents, the Canadian income tax generally may not be more than 15%.
A 5% rate applies to intercorporate dividends paid from a subsidiary to a parent corporation owning at least 10% of the subsidiary's voting stock. However, a 10% rate applies if the payer of the dividend is a nonresident-owned Canadian investment corporation.
These rates do not apply if the owner of the dividends carries on, or has carried on, a business in Canada through a permanent establishment and the holding on which the income is paid is effectively connected with that permanent establishment.
taxmap/pubs/p597-003.htm#en_us_publink1000104528

Interest (Article XI).(p3)


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Generally, Canadian source interest received by U.S. residents is exempt from Canadian income tax.
The exemption does not apply if the owner of the interest carries on, or has carried on, a business in Canada through a permanent establishment and the debt on which the income is paid is effectively connected with that permanent establishment.
taxmap/pubs/p597-003.htm#en_us_publink1000104529

Gains from the sale of property (Article XIII).(p3)


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Generally, gains from the sale of personal property by a U.S. resident having no permanent establishment in Canada are exempt from Canadian income tax. However, the exemption from Canadian tax does not apply to gains realized by U.S. residents on Canadian real property, and on personal property belonging to a permanent establishment in Canada.
If the property subject to Canadian tax is a capital asset and was owned by the U.S. resident on September 26, 1980, not as part of the business property of a permanent establishment in Canada, generally the taxable gain is limited to the appreciation after 1984.
taxmap/pubs/p597-003.htm#en_us_publink1000104530

Royalties (Article XII).(p3)


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For Canadian source royalties received by U.S. residents, the Canadian income tax generally may not be more than 10%.
The following are exempt from Canadian tax:
  1. Copyright royalties and other like payments for the production or reproduction of any literary, dramatic, musical, or artistic work (other than payments for motion pictures and works on film, videotape, or other means of reproduction for use in connection with television),
  2. Payments for the use of, or the right to use, computer software,
  3. Payments for the use of, or the right to use, any patent or any information concerning industrial, commercial, or scientific experience (but not within a rental or franchise agreement), and
  4. Payments for broadcasting as agreed to in an exchange of notes between the countries.
This rate or exemption does not apply if the owner of the royalties carries on, or has carried on, a business in Canada through a permanent establishment and the right or property on which the income is paid is effectively connected with that permanent establishment.
previous pagePrevious Page: Publication 597 - Information on the United States-Canada Income Tax Treaty - Pensions, Annuities, Social Security, and Alimony
next pageNext Page: Publication 597 - Information on the United States-Canada Income Tax Treaty - Charitable Contributions
 Use previous pagenext page to find additional occurrences of topic items.