Canadian income tax rules generally require that withholding tax at a rate of 25% be withheld from certain types of income paid to non-residents. Generally, corporate dividends and income distributions from a trust are subject to withholding tax; however, residents of countries with which Canada has a tax treaty may be entitled to a reduced rate of withholding tax as provided for in the treaty. Canadian income tax rules have eliminated withholding tax on certain interest payments paid to arm’s length parties, and thus non-resident investors generally no longer need to rely on a tax treaty to obtain a favourable
withholding tax rate on interest.