Dividend withholding procedures for entities issuing dual-sourced income

U.S. persons holding securities issued by entities that are domiciled outside of the U.S., but which invest within the U.S. should pay particular attention to IB's tax withholding obligation in the event of a distribution by the issuer. These entities, which may include Canadian unit trusts, REITS, limited partnerships or other common shares, often distribute dividends and/or interest based on both the U.S. and non-U.S. sourced income. While U.S. persons reporting a valid taxpayer ID number on their Form W-9 are generally exempt from backup withholding on U.S. sourced income, the nature of the custodial arrangement for these particular securities is such that U.S persons may be subject to a withholding tax calculated at a fixed rate of 30% on that portion of the distribution associated with the US-sourced income. This is in addition to any withholding required to be applied to the non-U.S. sourced portion of the distribution as required by the relevant foreign taxing body.

It's important to note that these taxes will be withheld by the depository prior to remittance of the distribution to IB and the subsequent credit of the net distribution to the accounts of any U.S. persons. Accordingly, IB has no ability to reverse or reclaim the withholding on behalf of its clients. In addition, as IB does not remit the withholdings to the tax authority, we do not report such withholdings to either the tax authority or clients on their year-end tax forms.

As IB does not provide tax advice or guidance, we recommend that you consult with your tax advisor for assistance in determining the eligibility, if any, for a tax credit on this withholding.

Below lists securities where this type of withholding has been applied previously. This list is for informational purposes only and may not include all securities.

Symbol Security Name
CHE.UN Chemtrade Logistics Income Fund
CSH.UN Chartwell Seniors Housing Real Estate Investment Trust
DR.UN Medical Facilities Corp
EXE.UN Extendicare real Estate Investment Trust
FCE.UN Fort Chicago Energy Partnerships LP
HR.UN H&R Real Estate Investment Trust
NFI.UN New Flyer Industries Inc
UFS Domtar Corp
UVI Unilens Vision Inc