If you retire abroad, Tim, RRIF withdrawals and annuity income are subject to
Canadian withholding tax.
Today (8/23/10), adding up the components, an investor now has a value of $ 10.25 (1 TTT share at $ 7.21, rights worth $.17 and.498 KHDHF shares — assuming you pay no more than the 15 %
Canadian withholding tax on the June 30 KID share distribution — worth $ 2.87) for a loss of about 25 %.
The tax rules provide that there is generally
no Canadian withholding tax on interest paid to all arm's - length non-residents (regardless of their country of residence), with certain exceptions.
There are many I would love to own, but the extra 15 %
Canadian withholding tax makes them hard to justify for me.
That Canadian withholding tax is generally 25 % but often reduced to 15 % if your country of residence has a tax treaty with Canada and if the withdrawals are periodic withdrawals, like from a RRIF.
There are many I would love to own, but the extra 15 %
Canadian withholding tax makes them hard to justify for me.
Not exact matches
In these complex cases, the buyer may not be comfortable and may decide to submit the 25 %
withholding to the
Canadian tax authorities.
When the exit occurs, some buyers may decide to
withhold 25 % of the non-
Canadian investors» proceeds and then send these to the
Canadian Tax authorities under Section 116.
While Lulu will issue you one of their own ISBNs, they
withhold 30 % U.S.
tax from
Canadians in this case, unless you file a W - 8BEN form with them.
In a TFSA account, there is no
Canadian tax implication but effectively, you are paying a
withholding tax.
Yes, the 15 percent
withholding tax rate is for
Canadian residents holding US stocks or ETFs.
The
withholding tax isn't so bad compared to the
tax that the
Canadian government will charge on that income.
Does anyone know if
Canadian based mutual funds (invested in US equities) are subject to the US
withholding tax?
However, if
Canadian residents purchase US - based securities (such as Microsoft) in a TFSA, a 15 %
withholding tax applies.
Lets say my US stock is giving me a 8.5 % yield and I have to pay a
withholding tax of 15 % - this reduces the yield to 7.22 %, I know I can't claim back the 15 % but I am not further
taxed by the
Canadian Government for the 7.22 %.
Tax software adjusts the Canadian tax payable with the withholding tax already pa
Tax software adjusts the
Canadian tax payable with the withholding tax already pa
tax payable with the
withholding tax already pa
tax already paid.
If you buy US - listed ETFs that hold
Canadian securities, the fund itself will pay
withholding taxes to CRA.
@jai: The TD Mutual Funds are
Canadian mutual funds, therefore there is no direct
withholding tax.
With some
Canadian ETFs that hold international stocks, you'll pay two levels of
withholding taxes: one levied by the stocks» native countries and a second by the U.S.
If holding U.S. - listed funds reduces your MER and foreign
withholding taxes by 0.52 %, as Justin estimates, it would take two or three years to break even compared with simply using
Canadian ETFs.
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withholding taxes on stock option benefits
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Holding a
Canadian - listed ETF that in turn invests in U.S. stocks will result in a
withholding tax drag of 15 percent but this penalty may be acceptable to many
Canadians.
That's because many of its investors live in the U.S. and are subject to
withholding taxes on dividends from
Canadian firms.
@Germack: TD e-Series US Index Fund incurs the same 15 %
withholding tax hit as the Vanguard S&P 500 ETF because it is a
Canadian mutual fund.
The arrival of Vanguard in Canada, the response of iShares» Core ETFs and the response of BMO and other local players has meant
Canadian investors need to consider ahead of MERs things like
withholding tax treatment or U.S. estate
taxes.
Foreign
withholding taxes also occur with mutual funds and ETFs listed on
Canadian or U.S. exchanges, which is why this topic was featured in the ETF stream of a BMO Global Asset Management conference on ETFs and mutual funds that I participated in last week in Chicago.
But
Canadian ETFs that track the US and international indexes are dragged down by factors such as currency hedging,
withholding taxes and poor sampling.
Assume an individual has $ 31,000 in a TFSA and it holds only
Canadian equities (to avoid paying unrecoverable
withholding taxes on foreign dividends).
Remember that outside registered plans, investors can get the
withholding tax back if the assets are held directly in a
Canadian trust.
Per my understanding, most
Canadian stocks held in a
tax - advantaged account aren't subject to Canada's foreign
withholding.
If you've decided to include global REITs in your portfolio because of the diversification benefits they provide, you should also understand the foreign
withholding tax differences between two of the product structures available to
Canadian investors:
For example when buying
Canadian listed ETFS (etc VUN / XUU — tracking the US Market or VIU / XEF — tracking the International Developed market) foreign
withholding taxes on dividends come into play.
Bottom line: If a
Canadian ETF simply holds a US - listed ETF, an additional
tax drag is created due to
withholding taxes that are not recoverable when the ETF is held within a RRSP account.
My return on
Canadian equities should be higher than my return on US and International equities because the dividends are not subject to
withholding taxes.
Wouldn't that mean that the
withholding tax paid by yourself on the US ETF would be recoverable, but one paid by a
Canadian ETF holding a US ETF wouldn't be (the
tax is part of the MER expense)?
--
Canadian investors capturing exposure to global markets through ETFs listed in the US stock markets will experience additional leakage through
withholding taxes.
The other thing I would suggest is to consider the
tax implications of each investment and then balance them across multiple accounts; ie, the stuff that generates interest and that is
taxed at the highest rates (Bonds, GICs, REITs) goes in your TFSAs, International stuff goes into your RRSPs so there's no
withholding of foreign dividends, and stuff that generates
Canadian dividends goes in your taxable account to get the
Canadian gross up
tax dividend.
Besides if the person that past away was in Canada there is a
withholding tax as outlined in the
canadian tax code.
It seems
Canadian ETF providers are paying more attention to foreign
withholding taxes these days.
What we've called «Level I»
tax is levied by the countries where the stocks are domiciled (in this case, European and Asian countries), while «Level II» is an additional 15 %
withheld by the US government before the US - listed ETF pays the dividends to the
Canadian ETF.
If your U.S. stocks are held in a
Canadian mutual fund or ETF, you will pay the 15 %
withholding tax on the dividends even in an RRSP, and you won't be able to recover it.
If your blue chip stocks are U.S. dividend payers, there's another
tax issue to understand: the U.S. imposes a 15 %
withholding tax on dividends paid to
Canadians.
I would opt for
Canadian stocks over U.S. stocks in your TFSAs, as U.S. dividends will have 15 %
withholding tax otherwise.
But when a
Canadian ETF holds a US - listed ETF of international stocks (sometimes called a «wrap» structure) there may be two levels of
withholding tax.
So when a
Canadian ETF uses a wrap structure with an underlying US - listed ETF of international stocks,
withholding taxes apply as follows:
Trying to avoid a relatively small foreign
withholding tax while ignoring
Canadian income
tax is penny wise and pound foolish.
You should also understand that when
Canadian ETF providers report performance, they do so after subtracting foreign
withholding taxes: in other words, they do not presume these
taxes will be subsequently recovered.
If you have a
Canadian TFSA account, and then emigrate to HK, will the bank need to
withhold the 25 % non-resident of Canada
tax on the account (since you're now a non-resident of Canada)?
Canadian resident mutual funds, ETFs and pooled funds therefore have 15 per cent
withholding tax on dividends and only receive 85 per cent of any dividends paid by the underlying U.S. stocks.
Canadian mutual funds or
Canadian listed exchange traded funds (ETFs) that own foreign stocks are also subject to
withholding tax on dividends earned in an RRSP.