Reducing a withholding tax rate on a specific distribution

If it is necessary to Override the Tax Percentage on the distribution (done on the distribution declaration), the overridden percentage will be applied to all the Investor Accounts that share in the distribution UNLESS they are withholding tax exempt or they have a Double Taxation Agreement (DTA) agreement in place with reduced interest and dividend rates.  If exempt, no withholding tax is taken.  If there is a DTA in place with reduced tax rates, the reduced tax rates will apply and not the Tax Percentage Override Rate on the distribution.

This is the process to follow should the withholding tax rate need to be reduced on a specific distribution split category once.

Follow the process Add and Allocate Distributions

At step 5 you can reduce a rate as follows

Example calculation:

On the category where a Tax Percentage Override is added, the Withholding Tax will not be the Custodian’s Withholding Tax Rate but the Override percentage.

If Custodian’s Withholding Tax Rate was 30%, in this specific distribution it will only be 5% as shown in the above diagram.

But

If an Investor Account sharing in this distribution has a DTA agreement in place with  reduced withholding tax rates, their reduced rates will apply. In the diagram below, the rate applied will be 10% and not 5%

Last Updated on 1 year ago by Debra Hart