Canadian Oil Trust inside Traditonal IRA

Submitted by Richard Proulx on Mon, 2009-01-26 17:12

I have a Canadian Oil Trust (PWE) as an IRA holding. The dividends paid are subject to a 15% Canadian tax. I think there are ways to recover some or all of this tax in taxable accounts.
Since the account is an IRA, can the tax be patially recovered or just gone?
Thanks.



Submitted by Alan Spross on Mon, 2009-01-26 21:09

Since this is apparently structured as a trust and not a corporation, there is no recovery option.

However, were this a corporate dividend rather than a trust, then there should be no withholding at all under the US Canada tax treaty. If a corporate dividend is withheld, it can be recovered directly from the Canadian govt by filing Form NR7-R.

Submitted by Richard Proulx on Mon, 2009-01-26 22:02

Yes, it is a trust. Canadian trusts (I believe) do not pay corporate taxes, Hense, the popularity. I hear the Canadian gov’t will close that loophole in 2011. I expect the lucrative dividend will be greatly reduced. I will exit well before that date and re-evaluate after the dust settles.
Thanks again.

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