— Tablesalt 🇨🇦 (@Tablesalt13) May 23, 2025
Canada's largest pension fund has now allocated 47% of its total portfolio ($243 Billion) to U.S. assets, an increase from 42% last year 🚨🚨 pic.twitter.com/pN2S7bHFzT
— Barchart (@Barchart) May 25, 2025
Canadian investors and businesses are in the crosshairs of Washington’s latest tax overhaul. The U.S. House of Representatives narrowly passed the One, Big, Beautiful Bill with a 215-214 vote, setting the stage for dramatic tax increases on Canadian-held U.S. assets. If the bill becomes law, it will override the Canada-U.S. tax treaty, in place since 1942, triggering major financial consequences for Canadian shareholders.
At the center of the legislation is Section 899, designed to counter what the U.S. considers “discriminatory or unfair taxes” imposed by foreign governments. Canada’s digital services tax (DST), introduced in 2024, is among the primary targets. The bill ramps up withholding taxes for Canadians who own U.S. securities until Ottawa eliminates the DST.
Canadian corporations currently pay 5% withholding tax on U.S. dividends, benefiting from a favorable treaty rate. Section 899 will increase this rate by 5 percentage points per year, eventually reaching 50%—20 points above the statutory rate. Individual investors who directly own U.S. securities will see their current 15% withholding tax rise to 50% over time. The tax penalty stays in place unless Canada repeals its digital tax.
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