The reprieve has expired.

A little more than a year ago, on Dec. 22, 2011, the Canada Revenue Agency (CRA) delayed from Jan. 1, 2012, until Jan. 1, 2013, the effective date of new rules that require certification by non-Canadian-resident shareholders of Canadian companies that they are eligible for tax treaty benefits, including a reduced withholding rate on dividends paid by Canadian companies.

The CRA is seeking formal validation of tax-treaty rate eligibility from Canadian dividend payers, a change from the previous view that merely residing in such a country was sufficient to qualify. This means that companies that pay dividends to, for example, US shareholders, must have on record information that supports their eligibility for tax treaty benefits.

You may not be required to do anything. In fact it’s likely that your broker has already taken care of the certification on your behalf.

According to the CRA, Canadian dividend-payers are required to have

…recent and sufficient information to establish the identity of the beneficial owner for the purpose of the application of treaty benefits, whether they are resident in a particular country with which Canada has a tax treaty and whether they are eligible for treaty benefits under the tax treaty on the income being paid.

CRA Form NR301, “Declaration of Eligibility for Benefits under a Tax Treaty for a Non-Resident Taxpayer,” details the information the CRA is seeking. Form NR301 is available here. The new rule does not specifically require use or submission of the form in all cases. It simply requires the Canadian dividend payer to have sufficient information, based on the criteria set forth in Form NR301, to support eligibility.

The information requested on Form NR301 includes:

• Legal name of non-resident taxpayer;
• Mailing address;
• Foreign tax identification number (for US residents this is your Social Security number);
• Recipient type and Canadian tax number if you have one (you simply indicate whether you or the entity upon whose behalf your providing certification is an “Individual” or “Corporation” or a “Trust” along with the relevant Canadian identification number);
• Country of residence for treaty purposes;
• Type of income for which the non-resident taxpayer is making the declaration (“Interest, dividends, and/or royalties,” the relevant selection for our purposes, or “Trust income” or “Other,” with instructions to specify “income type”).
• A signature by the non-resident taxpayer or an authorized person of “certification and undertaking.”

According to the CRA, if the verification it seeks hadn’t been received by Jan. 1, 2013, it will withhold from dividends paid to US owners of shares in Canada-based companies at a rate of 25 percent rather than 15 percent, as is contemplated by the Convention Between the United States of America and Canada with Respect to Taxes on Income and Capital, or the US-Canada tax treaty, and accompanying conventions and explanatory notes.

You may have been asked by your brokerage to fill out and submit CRA Form NR301. On the other hand, many brokerages likely provided certification based on information they already possessed through your existing account information.

“Registered shareholders”–the stock you own is registered in your name on the underlying company’s books, which is kept by the company’s transfer agent, and you’re in physical possession of a certificate that represents your ownership interest–will likely have to complete forms for submission to your respective underlying companies’ transfer agent.

By now you should have received forms directly from transfer agents for all the underlying companies you own requesting information to confirm your tax treaty eligibility. If you haven’t already done so, registered shareholders should complete and remit these forms as soon as possible.

If you’re a registered shareholder of any Canada-based dividend-paying corporation, whether it was ever a trust or not, complete any such forms if they’ve already been forwarded to you.

If you are a registered shareholder of a dividend-paying Canadian corporation and haven’t received notification from it, it might be a good idea to send an e-mail or phone an investor relations representative at the relevant company.

Canadian Employment

Statistics Canada reported Friday morning that employment increased by almost 40,000 in December 2012, pushing the jobless rate down 0.1 percentage points to 7.1 percent, the lowest level since December 2008, when the rate was 6.8 percent.

The December 2012 increase, the fourth month of growth in the last five, was all in full-time work.

The consensus expectation was for job growth of around 5,000 for December after a surge of 59,000 in November. Analysts expected unemployment to rise to 7.3 percent.

Canadian employment is up 1.8 percent, or 312,000 jobs–all in full-time work–compared to 12 months ago. Over the same period the total number of hours worked rose 1.6 percent.

Employment in the private sector increased by 59,000 jobs in December, while there was little change in public-sector employment and self-employment.

On a year-over-year basis employment gains among private-sector employees totaled 242,000, or 2.2 percent, while public-sector employment rose by 92,000, or 2.6 percent. The number of self-employed was little changed over the last 12 months.

Among industries, employment increased in transportation and warehousing as well as construction, while there were fewer workers in professional, scientific and technical services; natural resources; and public administration.

Bay Street Beat

Action on Bay Street was limited over the past four weeks, as analysts enjoyed a holiday season and prepared for the next round of corporate reporting, which will get underway with Alcoa Inc’s (NYSE: A) traditional kickoff next Tuesday, Jan. 8, 2013.

Shaw Communications Inc (TSX: SJR/B, NYSE: SJR) will lead off for CE Portfolio Holdings when it posts fiscal 2013 first-quarter results on Wednesday, Jan. 9.

National Bank Financial has initiated coverage of Shaw Communications with a “sector perform” rating and a CAD22.50 12-month target. Five analysts rate the stock a “buy” versus 12 “holds” and two “sells.” The average 12-month target is CAD21.75.

There were some actions taken on Portfolio recommendations by Bay Street analysts, however, and here they are.

Atlantic Power Corp (TSX: ATP, NYSE: AT) was upgraded to “sector perform” from “sector underperform” at CIBC World Markets, though the buy target was reduced to CAD12.50 from CAD13. One analyst now rates the stock a “buy,” four rate it “hold” and three say it’s a “sell.” The average 12-month price target is CAD12.22.

Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–5–6–1 (CAD11.43) was upgraded to “outperform” from “sector perform” at National Bank Financial, with a buy-target boost to CAD11.25 from CAD11. Five analysts rate the stock a “buy,” six rate it a “hold” and one rates it a “sell.” The average 12-month price target on Innergex is CAD11.43.

TransForce Inc (TSX: TFI, OTC: TFIFF) was upgraded to “sector outperform” from “sector perform” at Scotia Capital with a 12-month target boost to CAD22.50 from CAD22. Nine analysts rate the stock a “buy” versus a single “hold.” The average 12-month target is CAD22.

Acadian Timber Corp (TSX: ADN, OTC: ACAZF)–1–2–1 (CAD13.13) was downgraded to “sector perform” from “outperform” at RBC Capital Markets, though the analyst maintained a CAD13 12-month target price. One analyst rates Acadian a “buy,” two rate it a “hold” and one rates it a “sell.” The average 12-month price target is CAD13.13.

IBI Group Inc (TSX: IBG, OTC: IBIBF) was upgraded to “sector perform” from “sector underperform” at Scotia Capital with a static target of CAD6.50. IBI was also upgraded to “sector perform” from “underperform” at Alta Corp Capital Inc, which also maintained its 12-month price target of CAD7. Two analysts rate the stock a “buy,” while nine rate it a “hold.” There are no “sell” ratings on IBI.

TD Securities initiated coverage of Newalta Corp (TSX: NAL, OTC: NWLTF) with a “buy” rating and a CAD19 12-month target. Newalta was downgraded to “underweight” by EVA Dimensions, the only blemish on the stock’s Bay Street record. Nine analysts rate the stock a “buy.” The average 12-month price target is CAD17.94.

Pengrowth Energy Corp (TSX: PGF, NYSE: PGH)–8–6–4 (CAD7.24) was moved to the “restricted” list at BMO Capital Markets, suggesting the two entities are entering a business relationship probably related to equity underwriting or commercial lending activity. Eight analysts rate Pengrowth a “buy,” six rate it a “hold” and four rate it a “sell.” The average 12-month price target is CAD7.24.

Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–12–2–3 (CAD28.31)–off restricted lists at four houses–BMO Capital Markets, FirstEnergy Capital Corp, Scotia Capital and Peters & Co Ltd–and back on their buy lists. Peyto’s buy-hold-sell line on Bay Street is now 12-two-three, with an average 12-month price target of CAD28.31.

Although the buy-hold-sell line for Poseidon Concepts Corp (TSX: PSN, OTC: POOSF) is basically unchanged–one-six-four this month versus one-seven-three in the December 2012 issue–the elimination of its dividend, its existing management team and likely some major part of forthcoming and previously reported revenue has led to a mass reduction in its 12-month buy target on Bay Street.

As of Dec. 7, 2012, the average among the analysts who cover the stock was CAD7.85. As of Jan. 4, 2013, the average is CAD2.69.

Here’s how the CE Portfolio–including now-sold Poseidon Concepts–stacks up on Bay Street heading into the reporting period for fourth-quarter and full-year 2012 results.

The number of analyst “buy,” “hold” and “sell” ratings for each company are shown, followed by the average 12-month price target among the analysts that provide such guidance.

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–6–1–2 (CAD35.13)
• Artis REIT (TSX: AX-U, OTC: ARESF)–6–3–0 (CAD17.69)
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–1–4–3 (CAD12.22)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–2–5–0 (CAD14.58)
• Brookfield Real Estate Services Inc (TSX: BRE, OTC: BREUF)–0–1–0 (CAD13.50)
• Brookfield Renewable Energy Partners LP (TSX: BEP-U, OTC: BRPFF)–5–6–0 (CAD31.40)
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–8–3–0 (CAD26.81)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–6–7–0 (CAD31.00)
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–3–5–0 (CAD22.39)
• Dundee REIT (TSX: D-U, OTC: DRETF)–5–2–0 (CAD41.25)
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–4–1–0 (CAD10.70)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–5–6–1 (CAD11.43)
• Just Energy Group Inc (TSX: JE, NYSE: JE)–2–3–2 (CAD10.71)
• Keyera Corp (TSX: KEY, OTC: KEYUF)–6–2–1 (CAD52.00)
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–3–6–1 (CAD33.94)
• Pembina Pipeline Corp (TSX: PPL, NYSE: PBA)–7–4–1 (CAD31.10)
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–3–7–0 (CAD30.08)
• Shaw Communications Inc (TSX: SJR/B, NYSE: SJR)–5–12–2 (CAD21.75)
• Student Transportation Inc (TSX: STB, NSDQ: STB)–2–2–0 (CAD7.16)
• TransForce Inc (TSX: TFI, OTC: TFIFF)–9–1–0 (CAD22)

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN, OTC: ACAZF)–1–2–1 (CAD13.13)
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–3–6–1 (CAD33.17)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–9–10–1 (CAD26.59)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–2–4–0 (CAD17.63)
• Colabor Group Inc (TSX: GCL, OTC: COLFF)–1–4–0 (CAD8.60)
• Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF)–17–4–1 (CAD47.50)
• Extendicare Inc (TSX: EXE, OTC: EXETF)–2–2–1 (CAD8.00)
• IBI Group Inc (TSX: IBG, OTC: IBIBF)–2–9–0 (CAD8.05)
• Newalta Corp (TSX: NAL, OTC: NWLTF)–9–0–1 (CAD17.94)
• Noranda Income Fund (TSX: NIF-U, OTC: NNDIF)–1–0–0 (CAD8)
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–4–5–0 (CAD20)
• Pengrowth Energy Corp (TSX: PGF, NYSE: PGH)–8–6–4 (CAD7.24)
• PetroBakken Energy Ltd (TSX: PBN, OTC: PBKEF)–13–8–1 (CAD15.99)
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–12–2–3 (CAD28.31)
• Poseidon Concepts Corp (TSX: PSN, OTC: POOSF)–1–6–4 (CAD2.69)
• Vermilion Energy Inc (TSX: VET, OTC: VEMTF)–11–5–1 (CAD53.25)
• Wajax Corp (TSX: WJX, OTC: WJXFF)–3–7–0 (CAD46.94)