TFSA Taxation confusion - Stocktrades Canada

If I hold a Canadian dollar listed ETF in my TFSA that holds no Canadian content but only US and offshore Etfs, is there any taxation personally or are they built-in? How do these work?

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Asked on February 12, 2022 1:11 pm

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In regards to the withholding tax, you shouldn't have to do anything yourself. It should be deducted on the back end.

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Posted by Dan Kent

Answered on February 13, 2022 7:13 am

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A Canadian currency ETF that holds underlying US stocks or ETFs will be subject to withholding tax, regardless of whether or not it's in an RRSP either. There are some... weird taxation rules when it comes to ETFs that trade in CAD but hold US securities/ETFs.

Instead of me explaining it all, I'll drop this article here as it is very helpful.

https://www.firstasset.com/resources/education/?article=Reference+Guide%3A+Foreign+Withholding+Taxes+on+ETFs+for+Canadian+Investors

If you go to the "Witholding Tax Levels By Account Type" you'll find a table that is pretty useful to reference. In your situation, it states you will owe withholding tax regardless of the account the funds are placed in.

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Posted by Dan Kent

Answered on February 13, 2022 7:12 am

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