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W-8ben canada Form: What You Should Know
Canada Tax 101: What Is a W-8BEN Form? Form W-8BEN-E allows Canadians, and other foreign contractors from countries with similar treaties with the U.S., to claim exemptions or special withholding rates. Form W-8BEN contains many pages, and must be filled out and signed by the individual or an authorized representative. What happens if a person claims an exemption from taxation based on a foreign treaty with the U.S. that the U.S. tax authorities (the IRS) are not aware of? If someone claims to be exempt from U.S. income tax on the basis of a foreign treaty with Canada, the U.S. tax authority (in Canada, they are called the Canada Revenue Agency (CRA) and will usually send a letter to the person indicating the reason for the IRS finding out about the treaty exemption. Usually, the CRA will send letters only to exempt persons claiming treaty exemptions on a “last in first out” basis if a treaty existed with both Canada and the U.S. The letter will give the date that the CRA finds out about the treaty exemption, and the reason for the finding out about the treaty exemption. The letter will usually describe what is covered by the treaty and the facts relevant to the finding out about any exemption. In the letter above, the CRA will explain how Canada's tax obligations for exempt persons may be affected by the finding out about the treaty exemption. In general, if an exemption from U.S. tax exists through a treaty, then it can only be claimed by exempt persons; the CRA cannot give an exemption to a corporation or trust for tax purposes. What if the person I send the letter to is not a Canadian? A U.S. resident can still claim an exemption from U.S. tax based on a foreign treaty with Canada by showing a W-8BEN form that is filled out and signed by someone who is a U.S. resident. A person claiming an exemption has to indicate he or she is a U.S. resident on Form W-8BEN, and if they receive a letter of notification from the CRA telling them that an exemption has been claimed, the CRA will notify him or her that they may have to file a return showing the U.S. income tax paid for the taxable year with the CRA if he or she does not claim the exemption. Form W-8BEN-E (Rev.
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