Canadian witholding tax and estate inheritance for non-residence
QUESTION:
My father died in June 2007. My father's Will names me as sole beneficary and executor.
I am currently Canadian non-resident. My question is whether the 25% witholding tax will now apply to ant monies and property transferred to me from my father's estate... would I be liable to "lose" 25% of the value of the home? Also, if non-resident would I lose 25% of the value of the funds when they are transferred (after they have already been 46% taxed as part of my father's final tax bill) , or, would I only lose the witholding tax of 25% on subsequent interest earned after transfer (keeping the funds in Canada)?
As the probate process is starting - I do hope that you can give me an early response as to whether you can provide a opinion regarding how the non-resident Witholding Tax would apply given my circumstances. Hope to hear from you soon.
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david ingram replies:
Your father's final T1 tax return and / or his estate T3 return should pay tax up to the date of disposition of the assets. Because of your non-resident status, it is easier for the estate to pay the tax internally on any interest or dividends or rents earned up to disposition and then the estate just gives you principal which woul dnot have any withholding tax whatsoever.
If, the executor chooses to disperse the internal earnings to the beneficiaries, he or she will have to dedcut 15% of any dividends, rent or interest sent to you.
If, on the other hand, you are in a tax treaty country (US, UK, France, Indonesia, Mexico, Japan, etc) the withholding tax would likley be 10% on any interest and 15% on any dividends with rents remaining at 25%.
My father died in June 2007. My father's Will names me as sole beneficary and executor.
I am currently Canadian non-resident. My question is whether the 25% witholding tax will now apply to ant monies and property transferred to me from my father's estate... would I be liable to "lose" 25% of the value of the home? Also, if non-resident would I lose 25% of the value of the funds when they are transferred (after they have already been 46% taxed as part of my father's final tax bill) , or, would I only lose the witholding tax of 25% on subsequent interest earned after transfer (keeping the funds in Canada)?
As the probate process is starting - I do hope that you can give me an early response as to whether you can provide a opinion regarding how the non-resident Witholding Tax would apply given my circumstances. Hope to hear from you soon.
-----------------------------------------------------------------------
david ingram replies:
Your father's final T1 tax return and / or his estate T3 return should pay tax up to the date of disposition of the assets. Because of your non-resident status, it is easier for the estate to pay the tax internally on any interest or dividends or rents earned up to disposition and then the estate just gives you principal which woul dnot have any withholding tax whatsoever.
If, the executor chooses to disperse the internal earnings to the beneficiaries, he or she will have to dedcut 15% of any dividends, rent or interest sent to you.
If, on the other hand, you are in a tax treaty country (US, UK, France, Indonesia, Mexico, Japan, etc) the withholding tax would likley be 10% on any interest and 15% on any dividends with rents remaining at 25%.
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