Canada's tax treaties generally allow Canada to tax interest paid by Canadian residents to non-residents, although complex sourcing rules will often come into play.

Often these rules will preclude Canada from taxing interest paid between non-residents even if such income is allowed as a deduction against Canadian-source income.

In addition, the definition of "interest" in those treaties is generally broad enough to include deemed interest, such as guarantee fees, although the treaty with Germany seems to be a notable exception in that regard.

Canada's tax treaties generally lower the rate of tax that Canada may levy on interest payments to either 10% or 15%. The rates applicable to certain major countries are outlined below. Since there will generally be no non-resident withholding tax on interest payments after 2007, these rates will only be applicable in connection with payments between non-arm's length parties.