Non-resident tax is the result of owning US assets in your portfolio. When US assets pay out dividends, they are subject to a tax for non-residents in TFSA, RESP accounts and non-registered accounts. This is because these accounts are not recognized by the US, while the RRSP is recognized through a tax treaty.
Despite this tax, there is no requirement to file any forms with the IRS. It is also still very advantageous to own US assets, despite this withholding tax. Owning US assets helps to diversify the holdings of your portfolio and generally make up a notable portion of Wealthsimple portfolios.
In addition, when you first open an account with us, you would be asked to sign a W-8BEN. This allows us to reduce the non-resident tax for our Canadian-resident clients! Similarly, if you have a Corporate account with Wealthsimple a W-8BEN-E form is a declaration that your company is registered in Canada, which means that you will be eligible for a reduced withholding tax rate if you own U.S. dollar investments in your Corporate account. The validity of the W-8BEN and W-8BEN-E forms expire every 3 years (this timeline is stipulated by the CRA & IRS), so once we near that timeframe we re-surface a new copy for you to sign when you log in!
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