How Does the Big Beautiful Bill (BBB) Impact You?

There’s been a lot of noise in the headlines lately about the new U.S. tax bill — the One Big Beautiful Bill, that was signed into law on July 4th, 2025.

Section 899: What Would Have Been a Cross-Border Tax Issue

Prior to July 4th, a provision in the bill called Section 899 would have allowed the U.S. to override the Canada-U.S. Tax Treaty and increase withholding taxes on income Canadians earn from U.S. investments. This includes items such as:

• Dividends from U.S. stocks and ETFs
• Real estate rental income or sales proceeds
• REIT distributions

Under Normal Conditions:

• U.S. dividends in an RRSP or RRIF are not taxed at source (thanks to the treaty).
• In non-registered accounts, the U.S. typically withholds 15%, and you get a tax credit in Canada.

But Section 899 threatened to raise those rates by up to +20 percentage points, meaning withholding could jump as high as 35% or more, even in your RRSP or RRIF (Greenberg Traurig, 2025).

Here’s the Good News for Canadian Investors:

When the BBB was signed into law on July 4, none of its proposed tax changes — including higher withholding taxes on Canadian individuals, corporations, pension plans, and trusts came into effect (Investment Executive, 2025).

So where does that leave us?

• Since section 899 is not part of the bill, it currently has no legal effect.
• The Canada–U.S. tax treaty remains fully in force, ensuring continued access to preferential tax rates on dividends, interest, and other income (RRSPs and RRIFs are still “U.S. tax shelters”)
• As things stand, no new U.S. surtaxes apply to Canadian investors under current legislation.

Just because section 899 was excluded, this doesn’t mean the work is over. Here’s what Innova is doing next:

• Staying on top of legislative changes to assess how future versions may affect your retirement plan.
• Proactively positioning portfolios. While no action is needed yet, we’re ready to pivot if tax rates change with minimal disruption to your plan
• If ever there is a risk posed to your investments, we are:
  • Stress-testing your U.S. exposure or reviewing where U.S. assets are held (RRSPs, TFSAs, corporates, or non-registered) and identifying where treaty changes could hurt most.

In short, we’re staying ahead of these developments to keep your plan resilient, and your wealth properly positioned as tax rules change.

If ever you want to discuss further, please reach out!

Thank you for your continued trust!

References:

This publication is for informational purposes only and shall not be construed to constitute any form of advice. The views expressed are those of the author alone. Opinions expressed are as of the date of this publication and are subject to change without notice and information has been compiled from sources believed to be reliable. This publication has been prepared for general circulation and without regard to the individual financial circumstances and objectives of persons who receive it. You should not act or rely on the information without seeking the advice of the appropriate professional.