Viewing Opinion | StockChase
stockchase picture

Compiling comments that experts make about stocks while on public TV.

2017-04-17

General Comment by John DeGoey

Bias Subject Owned
UNKNOWN PERSONAL FINANCE & ETFs _N/A

Is it prudent to put US ETF’s or US stocks in a TFSA? He doesn’t recommend putting US stocks into TFSA’s because of certain advantages being lost because of the dividend.

John DeGoey
Portfolio Manager, Industrial Alliance Securities

2 Comments

NOD

April 17th 2017 at 9:26pm

"He doesn’t recommend putting US stocks into TFSA’s because of certain advantages being lost because of the dividend." What advantages? Elaborate please.

utiac

April 19th 2017 at 2:20pm

Inside your RSP, dividends from US corporations are not subject to withholding tax because of the reciprocity agreement Canada has with the US. There is as yet (as far as I'm aware) no agreement that dividends from US equities will be treated similarly inside your TFSA. Some information is here:
http://business.financialpost.com/personal-finance/taxes/when-a-tax-free-savings-account-isnt-tax-free

However, it comes down to choice. It's only 15% withholding tax on your dividend, so as long as the company has share price growth, you may not care. But if the company pays out most of its earnings as dividends and has little prospect for share price growth, you may want to avoid holding in your TFSA.

All that being said, it seems Canada Revenue Agency could have soemthing to say on this but doesn't:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/txtn/menu-eng.html

Perhaps that's because it's not up to them but to the country taxing the dividends paid to you inside your TFSA.


You must be logged in to comment.