{"id":931037,"date":"2021-07-13T23:24:22","date_gmt":"2021-07-14T03:24:22","guid":{"rendered":"https:\/\/www.finder.com\/ca\/?p=931037"},"modified":"2025-11-21T17:46:11","modified_gmt":"2025-11-21T22:46:11","slug":"w-8ben-form","status":"publish","type":"post","link":"https:\/\/www.finder.com\/ca\/stock-trading\/w-8ben-form","title":{"rendered":"What is a W-8BEN form?"},"content":{"rendered":"

The United States Internal Revenue Service (IRS) issues W-8BEN forms to help Canadians avoid paying income tax to both the US and Canadian governments on passive income\u2014like positive returns on US stocks. Keep reading to learn what the Form W-8BEN is, who should use it and how it can help you save on tax obligations.<\/p>

What is a W-8BEN form?<\/h3>

If you earn passive income from US sources, Form W-8BEN is used to inform the IRS that you\u2019re legally exempt from paying US income tax or that you qualify for a reduced tax rate.<\/p>

This form applies only to fixed, determinable, annual or periodical (FDAP) income, such as dividends, interest, rent, royalties and annuities\u2014not income from effectively connected income (ECI), which is taxed differently.<\/p>

The form ensures the US withholds the correct amount while you report the income to the Canada Revenue Agency (CRA). Without a filed W-8BEN, you could face the full 30% withholding tax rate and potential double taxation by both the IRS and CRA.<\/p>

Who should use a Form W-8BEN?<\/h3>

Anyone who earns US-sourced income but isn\u2019t a US citizen or resident should use Form W-8BEN for tax purposes. The form certifies your foreign status and, if applicable, claims reduced withholding tax under the Canada-United States Income Tax Convention.<\/p>

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To foster good relationships with international trading partners, the US has entered into tax agreements with many nations\u2014including Canada. The Canada-United States Income Tax Treaty prevents Canadian residents with US income from paying income tax in both countries.<\/p>\n <\/div>\n <\/div>\n<\/div>\n

When do Canadians have to submit a W-8BEN form?<\/h3>

As a Canadian investing in US securities, you must provide a W-8BEN form to your brokerage or any US payer whenever you earn US-source income. Here\u2019s when the form is required:<\/p>

1. When opening a non-registered brokerage account<\/h4>

If you open a non-registered investment account (like, cash, margin or USD-denominated investment accounts) at a Canadian brokerage, you\u2019ll typically be required to submit a W-8BEN form. The reason being that these types of accounts can hold US stocks, ETFs or bonds that may pay US-source dividends or interest.<\/p>

2. When holding US securities in a registered account<\/h4>

If you buy or hold US investments inside a registered account\u2014like a TFSA<\/a>, RRSP, RESP or RRIF\u2014your brokerage may also require an up-to-date W-8BEN to ensure the correct US withholding tax rate is applied.<\/p>

Note that TFSA and RESP income from US dividends may still be subject to withholding tax even if you have a W-8BEN form filed.<\/p>

3. Before receiving any US-source income<\/h4>

You must have a valid W-8BEN on file when receiving income such as:<\/p>