US Stocks vs Canadian Stocks

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Hi, is it worthwhile investing in US stocks vs Canadian stocks? I have a small percentage in US stocks in a TFSA and wondered about the tax implications on both sides of the border. Any recommendations?

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Asked on December 26, 2020 10:48 am
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Thanks Matt, I will certainly reach out to my tax advisor. Thank you.

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Posted by Pamela Branch
Answered on December 26, 2020 6:00 pm
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Hi there,

We don't typically get into tax questions here as everyone's tax profile is very different. We certainly recommend talking to a tax advisor for the optimal tax trading strategies to fit your profile. That being said, there are tax implications of holding US stocks in your TFSA if said company is paying distributions/dividends. Likely subject to a 15% withholding tax which is why a 'general' rule of thumb is to hold dividend paying US stocks in your RRSP to avoid those. If there are no distributions/dividends, than there are no tax implications of holding in a TFSA. It becomes much more complicated if you are holding U.S REIT or LP in your portfolio. Once again, we recommend speaking to a tax advisor to nail down a tax strategy for your own profile.

Of note, we are also of the opinion that investors should have exposure to the U.S. markets for a more diversified portfolio. So the fact you are thinking about it, is a good thing.

Mat

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Posted by Mathieu Litalien
Answered on December 26, 2020 1:34 pm