The Expiring Withholding Statement Report identifies clients whose withholding statements are nearing expiration or have already expired. These statements are essential for certain account types to ensure proper tax treatment under applicable tax laws and treaties. Timely action helps maintain favourable withholding rates on U.S.-source income and prevents avoidable tax implications for clients.
What is a Withholding Statement?
A withholding statement is typically used in conjunction with W-8BEN-E forms or other tax documentation for entities such as partnerships, trusts, or intermediary structures. It outlines the allocation of U.S. sourced income to underlying beneficial owners, confirming their treaty status and eligibility for reduced withholding rates. This is common for accounts involving multiple parties or ownership layers.
Why Clients Appear on this Report
Clients will appear on the Expiring Withholding Statement Report when their existing withholding statement is approaching its expiration date or has expired. Like W-8 forms and treaty statements, withholding statements generally expire at the end of the year they were signed plus three full calendar years.
How this Impacts Clients
An expired withholding statement can lead to the loss of reduced withholding tax rates. In the absence of a valid statement, U.S. payors apply the standard 30% withholding rate to U.S.-source income instead of applying lower rates as outlined by treaties (such as the Canada-U.S. Tax Treaty). This could lead to clients paying significantly more tax than necessary on U.S. investment income.
How to Access the Expiring Withholding Statement Report
To access the Expiring Withholding Statement Report:
- Log in to the CRM portal.
- From the left navigation menu, click CRM > Accounts.
- On the account’s index page, you can access the report as a saved view by clicking +Add view to the right of the tabs on the index page, and selecting Expiring Withholdings Statement Report from the dropdown.
You will now see a filtered view of clients whose withholding statements are approaching expiration or have expired.
Resolving Expiring or Expired Withholding Statements
To address expiring or Expired Treaty Statement reports, submit an update request through the CRM:
- Navigate to the client's CRM Contact Record.
- Submit an Update Account Documentation > Withholding Statement service requests
For detailed instructions, see the related article: Learn how to update an Expired Withholding Statement report.
Best Practices
- Review the Expiring Withholding Statement Report monthly or quarterly.
- Reach out to clients in advance to collect updated statements before expiry.
- Ensure clients understand the importance of maintaining accurate and current withholding documentation to avoid higher tax rates.