American Hotel Income Properties REIT 6 00 Convertible Unsecured Subordinated Debentures T.HOT.DB.V

RE:RE:RE:RE:RE:RE:Withholding tax question

[bcsc]

The first link you provided shows very clearly in the chart halfway down the page that Canadian Individual, TFSA, and Corporate unitholders are subject to 15% withholding tax on ordinary dividends and that TFSA and RRSP unitholders are not eligible for Foreign Tax Credit.

The second link you provided states "At the end of AHIP LP's taxation year (December 31) the US and Canadian taxable income respectively, of AHIP LP are each determined and it is possible that the character of the above distribution may be revised at that time"

So there is withholding tax of 15% on "Ordinary dividends" but not return of capital. Therre is no foreign tax credit for TFSA holdings and they indicate that the character of the distribution can be changed after the end of the year. TD (and I assume other brokers) are only responding to the changed information that AHIP LP provides to them.

The Withholding tax has everything to do with the IRS. 
The Foreign tax credit availability is due to Revenue Canada.

For Canadian unitholders:
1. Hold in Individual account (non registered) Pay 15% withholding tax on ordinary dividends (not on return of capital), claim foreign tax credit, pay capital gains tax (at inclusion rate at time of sale)
2. Hold in RRSP:  No withholding tax, all income is deferred  until withdrawn when it is all taxed at your marginal rate. (no capital gains reduction).
3. Hold in TFSA: Pay 15% withholding tax on ordinary dividends (not on return of capital) No foreign tax credit. No capittal gains tax

Choose your poison.