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I've had a couple Canadian Royalty trusts in my IRA - currently, I have one. I've also had canroy's in unsheltered accounts. Until now, dividends paid on the ones in the unsheltered account got Canadian tax taken out - recoverable as a tax credit, fine. No tax was taken on the divy's in the IRA. Surprise, surprise - my February dividend on the PWI position in my IRA got zinged for 15%. PWI informs me that changes to Canadian tax law enacted in January forces them to now take 15%, and it's up to the IRS to determine whether they are going to compensate for it.

Anybody know what's really going on here, and whether Canada is likely to start honoring US tax exempt status of IRA's again? Or if the IRS is likely to make some adjustment? I believe the latter is unlikely - apparently, you have just lost foreign tax out of IRA's to this point. I'm loathe to get out of the canroy, which has both paid fat dividends and appreciated nicely to this point (the latter is a bonus, and I'm not counting on it to last). But tax leaking out of an IRA is just annoying.
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