IC 71-9R

This circular cancels and replaces Information Circular 71-9.

1. Every broker and dealer in securities is required by Subsection 153(4) of the Income Tax Act and Part I of the Income Tax Regulations to remit to the Receiver General for Canada, within 60 days from the end of each taxation year, a 25% tax in respect of unclaimed dividends.

2. The taxation year of a corporation is a fiscal period, and the taxation year of an individual is a calendar year.

3. Unclaimed dividends are dividends received in the twelve-month period immediately preceding the taxation year of a broker or dealer that are still unclaimed at the end of the taxation year.

4. The amount of an unclaimed dividend from which a foreign tax was withheld is the net amount received by the broker or dealer.

5. Dividends claimed by the owner thereof are taxable income of the claimant in the calendar year in which they were received by the broker.

Remittance of tax

6. The remittance, payable to the Receiver General for Canada, is to be forwarded within 60 days from the end of the taxation year to the district taxation office, together with a statement showing the period covered, the gross amount of unclaimed dividends (less foreign tax withheld if applicable) and the amount of tax deducted. This remittance should not be included with any other remittance of income tax or tax deductions.

Deceased broker or dealer

7. If a broker or dealer dies, the estate representatives should notify the district taxation office in writing that

(a) the business will continue, and the estate, surviving partners, or new proprietors have assumed the liability of the deceased broker or dealer for the remittance of tax in respect of unclaimed dividends received in the year of death and the immediately preceding period, or

(b) the tax in respect of unclaimed dividends received in the twelve-month period immediately preceding the year of death will be remitted within twelve months from the end of the period, and that the tax from unclaimed dividends received in the year of death will be remitted within twelve months from the date of death.Reporting dividends claimed

Where the 25% tax has NOT been remitted

8. Dividends claimed by a resident should be reported on a T5 return for the calendar year in which the broker received the dividend, to be filed not later than the last day of February following the end of the calendar year in which the dividends are claimed. If dividends received by the broker or dealer in more than one calendar year are paid to the same claimant in the same year, separate slips should be prepared for each calendar year in which the broker or dealer received the dividend and that year should be shown on each T5 slip.

9. Payments of dividends to a member of a stock exchange, an investment dealer, a trust company, or bank need not be reported on a T5 return.

10. If a dividend is claimed by a non-resident, non-resident tax should be deducted and remitted to the Taxation Centre along with form PD7A-NR, “Non-Resident Tax Remittance Statement.” The details of the payment should be reported on forms NR4 Summary and Supplementary filed with the Ottawa Taxation Office by March 31st of the following year.

Where the 25% tax HAS been remitted

11. Dividends from which the tax has been remitted should be reported on a separate T5 return to be filed not later than the last day of February following the end of the calendar year in which the dividend was claimed if paid to a resident. Dividends claimed by a non-resident should be reported on an NR4 Supplementary and filed along with an NR4-NR4A Summary by March 31st following the end of the calendar year in which the dividend was claimed. A T5 slip or NR4 slip should be prepared for every claimant regardless of the amount claimed.

12. The T5 Summary should be identified “Unclaimed Dividend Account” immediately following the name of the broker or dealer, and the total dividends claimed and tax deducted entered in the appropriate spaces in item 4. Each T5 slip should be marked “Unclaimed Dividend Account” beneath the payor’s name, and should show the year the dividend was received by the broker or dealer, the name of the dividend-paying corporation, and the amount of tax withheld. If dividends received in more than one calendar year are paid to the same claimant, separate slips should be prepared for each year.

13. The NR4 Summary should be identified “Unclaimed Dividend Account” immediately following the name of the broker or dealer, and the total dividends claimed and tax withheld should be entered under “Dividends.” The NR4 slips should be prepared in the same way as the T5 slips for residents. Since a 25% tax has been withheld, no further deduction is required.

REFUNDS

Beneficial owners

14. Any application by a resident for refund must be made in writing by the claimant to the district taxation office within four years from the date of mailing the notice of original assessment for the taxation year in which the broker or dealer received the dividend. If the claimant is a non-resident, the application should be made in writing on form NR7R within two years from the end of the calendar year in which the broker or dealer remitted the tax to the Receiver General.

Dealers or brokers

15. Where a dealer or broker has received an overpayment or a misallocated payment and has subsequently remitted 25% to Revenue Canada because the amount remained “Unclaimed,” the Department will reimburse the amount upon application and certification. A facsimile certification form is attached as a guideline (see Annex I).

16. If further information is required, contact your district taxation office.

ANNEX I
Claim in respect of unclaimed dividends

Please refund $

to:

(name)
(address)
(city) (province)
(postal code)

This claim is in respect of an incorrect payment of dividends on which a portion was remitted to your District Taxation Office on 19 by

(claimant)
(address)
(city) (province)
(postal code)

as part of a remittance totalling $

Security
Disbursing agent
Gross amount $

25% unclaimed dividend tax $

(date) (signature of authorized person) (telephone)