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A non-citizen, non-resident of Canada bought some shares of the Vanguard FTSE Developed All Cap ex U.S. Index ETF, which is listed on the Toronto Stock Exchange (ticker: VDU). When the ETF pays out dividends, will the investor in question need to pay any Canadian dividend taxes? If so, what is the nature of the tax, and what is the tax rate?

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The CRA withholds 25% from dividends paid to non-Canadians (see here). If there's a tax treaty that applies to you and affects the rate - you should let the payer know so that they adjust the withholding accordingly. For example, for US residents the US-Canadian tax treaty reduces that rate to 15%. You do not need to file a Canadian tax return since the tax is withheld at source.

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  • Do brokerage firms deduct the taxes from my dividends and send the money to the CRA on my behalf so that I do not have to submit anything to the CRA?
    – Flux
    Oct 1, 2022 at 7:31
  • @Flux yes. That's what "withheld at source" means.
    – littleadv
    Oct 2, 2022 at 2:43

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