The Canada-US Treaty (see also Canada-US Protocol) provides that dividends paid by a corporation resident in Canada to a US resident may be taxed in the US. The dividend may also be taxed in Canada, and if the US resident is the beneficial owner of the shares, the tax cannot exceed:
(1) 5 per cent of the gross amount of the dividends where the beneficial
owner is a company that owns at least 10 per cent of the voting stock of
the company paying the dividends (for this purpose, a company that is a
resident of a Contracting State shall be considered to own the voting stock
owned by an entity that is considered fiscally transparent under the laws
of that State and that is not a resident of the Contracting State of which
the company paying the dividends is a resident, in proportion to the company’s
ownership interest in that entity).
(2) 15 per cent of the gross amount of the dividends in all other cases.
It is the same for the Canada-Mexico Treaty. The Canada-US Treaty differs
from the OECD Model. The OECD Model provides that, if a company of one
of the States owns directly a holding of at least 25 per cent in a company
of the other State, a rate of 5% is provided in respect of dividends.