Comments on: How Withholding Taxes Affect the Choice of International Investments?

By: Showtime

Showtime — Mon, 31 Jan 2011 02:24:55 +0000

Is the tax issue the same if a Cdn ETF holds US stocks, and in an rrsp…or is it only an issue if a Cdn ETF holds a US ETF?…ie is the issue that a Cdn ETF is holding anything US/foreign, or is the issue that a CDn ETF is holding a US ETF (that is holding US/foreign assets). Thx.

By: david pritchard's personal website | periodic personal perceptions

david pritchard's personal website | periodic personal perceptions — Sun, 16 Jan 2011 19:22:57 +0000

[...] index fund for the other parts of my portfolio. I’m particularly cautious about the tax effects of holding Canadian-based funds that just buy an underlying American [...]

By: Are US-listed ETFs Really Cheaper?

Are US-listed ETFs Really Cheaper? — Fri, 12 Nov 2010 01:26:24 +0000

[...] I assume that the Canadian ETF simply holds the US-listed version of the same fund. There are several common examples of this in Canada: iShares XSP doesn’t directly hold the stocks in the S&P 500, but rather holds the iShares S&P 500 Index Fund (IVV). The same goes for iShares XIN, which holds the iShares MSCI EAFE Index Fund (EFA), and Claymore’s CWO, which holds the Vanguard MSCI Emerging Markets ETF (VWO). These ETFs are subject to the 15% withholding tax on foreign dividends. For more on this confusing but important tax rule, see this post by Canadian Capitalist. [...]

By: Put Your Assets in Their Place

Put Your Assets in Their Place — Thu, 08 Jul 2010 20:33:13 +0000

[...] not eligible for the tax credit. These ETFs are best held in a tax-sheltered account. However, as Canadian Capitalist has pointed out, XSP and XIN (which simply hold US-listed ETFs in a Canadian wrapper) are still subject to the US [...]

By: Should You Buy US-listed ETFs? « Canadian Couch Potato

Should You Buy US-listed ETFs? « Canadian Couch Potato — Sun, 24 Jan 2010 18:48:28 +0000

[...] is an important consideration that even many advisors are clueless about. Canadian Capitalist wrote an excellent post on the topic last [...]

By: Canadian Capitalist

Canadian Capitalist — Wed, 28 Oct 2009 14:55:11 +0000

@Dim: US withholding taxes are only applicable to dividends, not capital gains.

By: Dim

Dim — Wed, 28 Oct 2009 07:30:25 +0000

Does the US Withholding Tax apply to dividend payments only, or does it apply to capital gains generated through active trading too? For instance, if I buy a stock at $10 and sell at $15, is there any tax withheld on the $5 profit (if no dividend is paid)?

Thanks!

By: David

David — Thu, 01 Oct 2009 18:58:17 +0000

I raised this issue with my financial advisor and got the following response: “.BUT I phoned the fund company…currently XSP and XIN will be same withholding tax whether held in an RSP and NON RSP and because the withholding tax is at a fund level instead of an individual level, you will not see any withholding tax being broken down in an RSP or a non RSP as the fund withholds it from a fund level in an RSP and NOn RSP thus unlike an individual stock since we would not mail you out(nor would any be produced) what the withholding tax is in a NON RSP you could not claim any back…thus as Barclays told me there is no difference on which account its held at”

By: Alex

Alex — Thu, 30 Jul 2009 19:59:45 +0000

What about the currency exchange rate spread?
If you pay >1% each time you buy or sell a $US ETF, rebalancing becomes really expensive compared to the MER difference.

By: Dave

Dave — Mon, 06 Jul 2009 03:11:09 +0000

with respect to US ETFs any US 15% wt is not fully recovered by Canadians through the foreign tax credit system – it’s prorated in proportion to your foreign income/can income..I think.