# Brookfield Renewables BEP.UN in TFSA?



## remowilliams (Jan 5, 2012)

Hi I'm a new member here, long timer lurker first time poster, great forum! 

I would be interested in any input from forum members concerning BEP.UN.

Recently Brookfield Renewables reformed itself into a limited partnership, some information from their website:

_Canadian Resident Unitholders

The exchange of Fund Units for BREP units is a taxable transaction for Canadian tax purposes. The exchange may result in a gain and taxable income to Canadian Unitholders. Canadian Unitholders may defer the gain for Canadian income tax purposes by filing a Tax Election with the Canada Revenue Agency. If your trust units are held in a non-taxable registered account, such as an RRSP, you do not need to complete a Tax Election. If your units are held in a taxable account, you should evaluate the benefits of making the Tax Election, if any. In order to defer any tax gain, you must complete the Tax Election before your filing due date for 2011 (the date upon which your Canadian tax returns are required to be filed for 2011). 

http://brookfieldrenewable.com/cont...nt_tax_information_for_unitholders-31187.html_


I would like to pick these guys up but would it make sense to hold these shares in a registered account(TFSA or RRSP?) or non registered?


thanks for any help!


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## 0xCC (Jan 5, 2012)

Unless you already own units the paragraph you quoted wouldn't apply to you. The units went through conversion to BEP.UN in mid-late November 2011.

As to whether to hold the units in a registered or non-registered account that is an individual choice that depends on more factors than you have discussed in your post.


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## remowilliams (Jan 5, 2012)

0xCC said:


> Unless you already own units the paragraph you quoted wouldn't apply to you. The units went through conversion to BEP.UN in mid-late November 2011.
> 
> As to whether to hold the units in a registered or non-registered account that is an individual choice that depends on more factors than you have discussed in your post.


I'm in my mid thirties, I'm salaried making about 90K/year.

I have no debts, TFSA is maxed out at the moment with some REITs and cash. I have RRSPs maxed out as well. I hold mostly USA blue chips, and some CDN banks. I also have some CDN mid caps and utilities in my non registered account. nothing exciting

My plan at the moment is to keep maxing out my registered accounts with stable blue chips or income generators and hold and monitor.

I asked about BEP.UN mainly because I'm not familiar with their new flow-through structure. Since they also have assets in Brazil and the USA, I was unsure if there would be withholding tax on that part and how that would be affected in a TFSA account - as opposed to RRSP


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## 0xCC (Jan 5, 2012)

Since the conversion is fairly recent there isn't really any good tax information yet. The company's website does seem to imply that there could be some USwithholding tax for Canadian investors so you may not want to hold these units in a TFSA since any US withholding tax would be lost (i.e., no credit on Canadian taxes for the withholding)

I personally hold units of this company in a non-registered account (and have had them since they were Great Lakes Hydro). I will be interested to see how this all plays out tax wise in 2012 because it isn't totally clear to me yet.


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## remowilliams (Jan 5, 2012)

0xCC said:


> Since the conversion is fairly recent there isn't really any good tax information yet. The company's website does seem to imply that there could be some USwithholding tax for Canadian investors so you may not want to hold these units in a TFSA since any US withholding tax would be lost (i.e., no credit on Canadian taxes for the withholding)
> 
> I personally hold units of this company in a non-registered account (and have had them since they were Great Lakes Hydro). I will be interested to see how this all plays out tax wise in 2012 because it isn't totally clear to me yet.


Thanks for your input.


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## zylon (Oct 27, 2010)

*Brookfield Renewable vs Brookfield Infrastructure*

Was going to add to my holdings of BEP.UN but price got away on me; so I bought some BIP.UN instead.

Over the past 3 years performance has been comparable.

BEP.UN +81%
BIP.UN +87%

Chart: http://stockcharts.com/h-sc/ui?s=BEP/UN.TO&p=W&b=5&g=0&id=p63529530492

ADDED:
I feel more comfortable buying shares when the price appears to have bottomed; occasionally, as with BIP.UN, I buy a small position closer to the top of the price range.

This article from TSI Network is a timely reminder not to do this too often.

Titled: *The dangers of trying to catch the momentum of rising stocks*
http://www.tsinetwork.ca/daily/inve...toolkit-dangers-catch-momentum-rising-stocks/


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## jerryhung (Mar 28, 2011)

sorry to bump this, but since BEP.UN issued some new shares (at $37.55), which account should we hold them?

Margin
TFSA
RRSP

from what I read, TFSA/RRSP may have 35% withholding tax and NOT recoverable?
so best is Margin?


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## 0xCC (Jan 5, 2012)

Do you have a source for "what you read"?

A 35% withholding tax is not a standard withholding tax rate so it seems a little odd...


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## jerryhung (Mar 28, 2011)

there are many source @@
https://www.quora.com/I-am-Canadian...y-and-will-I-need-to-fill-complex-tax-reports
http://www.dividendninja.com/mlp-taxation-in-canadian-accounts/

don't even know which ones are correct, I'll probably call TDW to ask later too
or easier, just sell them right away to not worry about dividends, ha


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## 0xCC (Jan 5, 2012)

Brookfield Energy Partners is not an MLP.

You might want to start with the website of the company you are interested in:
http://www.brookfieldrenewable.com/content/investor_relations/distributions-30413.html
and
http://www.brookfieldrenewable.com/content/investor_relations/tax_information-30427.html



> Notice on eligible dividends
> 
> Unitholders will receive, as part of their distributions, dividends paid by a Canadian corporation. For purposes of the enhanced dividend tax credit rules contained in the Income Tax Act (Canada) and any corresponding provincial and territorial tax legislation, such dividends are designated as “eligible dividends” and will be reflected as such on the Canadian tax slip.


Note that only part of the distribution is classified as a dividend.

There are a couple of things to be aware of with Brookfield Energy Partners. One is that they pay distributions in US dollars. The second thing is that for tax purposes they are actually based in Bermuda and if you hold it in a non-registered account you will get a different tax form at the end of the year (not a T3 or T5, but a T5013 form). Finally, since the distributions can be made up of interest, dividends, return of capital and foreign income not all of the distribution gets treated as a dividend (and therefore gets the dividend tax credit).


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## jerryhung (Mar 28, 2011)

0xCC said:


> Brookfield Energy Partners is not an MLP.
> 
> You might want to start with the website of the company you are interested in:
> http://www.brookfieldrenewable.com/content/investor_relations/distributions-30413.html
> ...


Duh, why didn't I think of that, ha, my bad, thanks

but easiest is probably to sell before 8/31 record date


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## 0xCC (Jan 5, 2012)

Well, according to my math 8/31 is just a little less than 3 months away which means that a record date just passed.

So unless you bought it in the last week you were a shareholder on the last record date which was May 31. If you weren't a shareholder on May 31 you have probably lost money on your investment since they announced a share offering yesterday and the stock is down around $1.20 or a little over 3% today so the stock is now less than 5 cents from the offering price of $37.55.


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## jerryhung (Mar 28, 2011)

0xCC said:


> Well, according to my math 8/31 is just a little less than 3 months away which means that a record date just passed.
> 
> So unless you bought it in the last week you were a shareholder on the last record date which was May 31. If you weren't a shareholder on May 31 you have probably lost money on your investment since they announced a share offering yesterday and the stock is down around $1.20 or a little over 3% today so the stock is now less than 5 cents from the offering price of $37.55.


It settles on June 10
so I wouldn't get the last 5/31 distribution anyway

I have 3 months to sell at breakeven or profit (hopefully)... 
Not sure if oil run-up is good for BEP or bad...


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## jerryhung (Mar 28, 2011)

now that TDDI has allocated all my BEP.UN - in Margin, TFSA, and RRSP
Probably will sell Margin/TFSA ones, keeping RRSP 

From Globe in 2013
Another reason I love registered accounts like RRSPs and TFSAs - The Globe and Mail
http://www.theglobeandmail.com/glob...ccounts-like-rrsps-and-tfsas/article15473084/



> Now, if you hold BIP.UN units in a registered retirement savings plan (RRSP) or registered retirement income fund (RRIF), the tax treatment is moot because you won’t pay any taxes on the distributions anyway. (That’s one reason I hold my BIP.UN units in my RRSP).
> 
> ............
> 
> I’m lazy and like to avoid paperwork if possible, which is another reason I hold BIP.UN in my RRSP. The same goes for its sister company, Brookfield Renewable Energy Partners LP (BEP.UN). That said, tracking the ACB isn’t really a big deal – you can do it with a pencil or a simple spreadsheet.


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## Eclectic12 (Oct 20, 2010)

^^^^

For the RRSP, hopefully people realise that while technically correct - the statement "won’t pay any taxes on the distributions" is a short term view. In the long term, when the distributions are withdrawn, one will pay one's current tax rate on the withdrawal.

It does avoid the need for bookkeeping and the short term taxes that a non-registered account would have. As noted, when understood - tracking the ACB is more tedious than difficult for most people.


Cheers


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## jerryhung (Mar 28, 2011)

Eclectic12 said:


> ^^^^
> 
> For the RRSP, hopefully people realise that while technically correct - the statement "won’t pay any taxes on the distributions" is a short term view. In the long term, when the distributions are withdrawn, one will pay one's current tax rate on the withdrawal.
> 
> ...


^ agree. RRSP is simply tax DEFERRAL, not TFSA type of tax-free

Although I can imagine it's worse in Margin account - imagine holding 10 years, calculate ACB for BEP.UN over the years to calculate proper Capital Gain? ouch ..


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## Drauss (Nov 29, 2016)

jerryhung said:


> ^ agree. RRSP is simply tax DEFERRAL, not TFSA type of tax-free
> 
> Although I can imagine it's worse in Margin account - imagine holding 10 years, calculate ACB for BEP.UN over the years to calculate proper Capital Gain? ouch ..




Apologies to bump this up

But if BEP.UN and BIP.UN are bought through RRSP.
Even if you had it that investment, and re-invest you proceedings and sell after say 5 years. You still shouldn't pay any taxes on capital gain and/or the cash proceeds.

Why do you say that RRSP is tax deferral ?


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## Spudd (Oct 11, 2011)

Drauss said:


> Apologies to bump this up
> 
> But if BEP.UN and BIP.UN are bought through RRSP.
> Even if you had it that investment, and re-invest you proceedings and sell after say 5 years. You still shouldn't pay any taxes on capital gain and/or the cash proceeds.
> ...


Because you pay taxes when you withdraw the money from the RRSP.


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## Eclectic12 (Oct 20, 2010)

jerryhung said:


> ... Although I can imagine it's worse in Margin account - imagine holding 10 years, calculate ACB for BEP.UN over the years to calculate proper Capital Gain? ouch ..


Sorry ... missed this awhile ago - without sorting out what the "flow through" implications are ... it is hard to say.

When I wasn't aware of the info needed plus the trust had been bought out, making the info needed harder to find ... it was a nightmare. Now that the process, what info needs to be captured and updates are done on a more timely basis - trusts don't bother me as much as trying to figure out phantom distributions for an ETF.





Spudd said:


> Drauss said:
> 
> 
> > ...But if BEP.UN and BIP.UN are bought through RRSP.
> ...


+1 ... for either registered account, transactions within the account have no Canadian tax implications.
Withdrawing from an RRSP means reporting income on that year's tax return versus the TFSA where there is no income to report.

Or to put it another way, $10K in a TFSA is worth more than $10K in an RRSP as the RRSP $$$ mostly likely will be taxed, reducing them.


The "deferred taxes" is meant to remind people that there are likely future taxes to pay.


Cheers


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## My Own Advisor (Sep 24, 2012)

Just be mindful many of Brookfield's companies pay dividends in USD $$. 

You can take the cash in CDN $$ or move your stock to the USD-side of your registered account and collect dividends in USD - nice to get some foreign currency exposure.

I'm with Eclectic - I always talk about RRSPs as a tax-deferred account because many folks still don't realize this. It's not tax-free people - sadly


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## Drauss (Nov 29, 2016)

Understood that when you withdraw .. you pay tax
but that has nothing to do with how that money was made in RRSP.

Correct me if i am wrong, but there is not reason for me to keep track of actual average cost when buying BEP.UN or BIP.UN through RRSP, regardless if i buy them through US or CAD account. Nor how the dividends are re invested ?


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## Drauss (Nov 29, 2016)

My Own Advisor said:


> Just be mindful many of Brookfield's companies pay dividends in USD $$.
> You can take the cash in CDN $$ or move your stock to the USD-side of your registered account and collect dividends in USD - nice to get some foreign currency exposure.
> I'm with Eclectic - I always talk about RRSPs as a tax-deferred account because many folks still don't realize this. It's not tax-free people - sadly


if i want USD dividend, not only i need to buy through US account but also need to buy the one TSX and not the on NYSE.
Because, i don't want my initial investment me in USD, but just to be "journalled" in US dollars.

Agreed ?


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## My Own Advisor (Sep 24, 2012)

You can buy BEP.UN and journal it for free to become BEP inside your USD $$ RRSP.

You can journal it back anytime.


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## Spudd (Oct 11, 2011)

Drauss said:


> Understood that when you withdraw .. you pay tax
> but that has nothing to do with how that money was made in RRSP.
> 
> Correct me if i am wrong, but there is not reason for me to keep track of actual average cost when buying BEP.UN or BIP.UN through RRSP, regardless if i buy them through US or CAD account. Nor how the dividends are re invested ?


Correct.


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## Spudd (Oct 11, 2011)

Drauss said:


> if i want USD dividend, not only i need to buy through US account but also need to buy the one TSX and not the on NYSE.
> Because, i don't want my initial investment me in USD, but just to be "journalled" in US dollars.
> 
> Agreed ?


You would buy the stock in CAD on the TSX and then phone your broker, and ask them to journal it to the US side of your account. After it's journalled you will hold the one on the NYSE and it will pay you dividends in USD. If you want CAD when you sell it, then phone your broker and ask them to journal it back to the Canadian side when you're ready to sell. Wait 3 days, and you can sell it in CAD.


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## Eclectic12 (Oct 20, 2010)

Drauss said:


> Understood that when you withdraw .. you pay tax ...


Then I am not clear for why there would be confusion as to why I am pointing out the withdrawal tax by calling the RRSP "tax deferral".




Drauss said:


> ... but that has nothing to do with how that money was made in RRSP.


How the grown appeared ... no. 
Growth however means more value that will by some day have to be withdrawn/taxed as income (i.e. a bigger future tax bill).

Maybe it's because you are focusing on the short term of what happens in the RRSP versus what taxes would have happened for the same transactions in a taxable account. This is the short term.

The long term view is that when the contribution is made, taxes paid are refunded ... when the withdrawal is made, the withdrawal is reported as income to be taxed. What would have been charged is deferred until withdrawal. At withdrawal, all tax advantaged income (ex. capital gains, dividends, return of capital) will be reported as the higher taxed income. As well, the tax rate for income may or may not be at a better rate than when the contribution was made.




Drauss said:


> ... Correct me if i am wrong, but there is not reason for me to keep track of actual average cost when buying BEP.UN or BIP.UN through RRSP, regardless if i buy them through US or CAD account. Nor how the dividends are re invested ?


It would not affect your decision making process to know that the broker's cost base stock A that says "small loss" is a medium gain when the dividends paid are added?


Cheers


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## Drauss (Nov 29, 2016)

^^ 
yes it will affect, you are 100% right on that.

thanks other for their opinions and feedback


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## My Own Advisor (Sep 24, 2012)

I'm with Eclectic, the more you can call the RRSP a tax-deferred account the more folks will realize both its power and weakness. Your RRSP "refund" is a government loan. You have to pay it back, eventually, but the good news is hopefully in a lower tax rate.

Agreed with Spudd, you can buy interlisted CDN stocks like BEP.UN, that pay dividends in USD - and journal them to the US side of your account. Keep there or journal them back to CDN side whenever you wish. No charge by discount brokerages and a good way to get more USD $$ into your account without buying stocks in USD.


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## humble_pie (Jun 7, 2009)

My Own Advisor said:


> Agreed with Spudd, you can buy interlisted CDN stocks like BEP.UN, that pay dividends in USD - and journal them to the US side of your account. Keep there or journal them back to CDN side whenever you wish. No charge by discount brokerages and a good way to get more USD $$ into your account without buying stocks in USD.




sorry, i disagree here. The brookfield family of stocks that pay USD dividends is an irregular outlier when it comes to the general rule that canadian-stocks-paying-USD-dividends-should-be-held-in-USD-accounts.

in some cases, brookfield's own treasury department will convert the bulk payment for a USD dividend destined for a particular broker into CAD. TDDI is a notable example of this. Evidently the brookfield policy for such conversion varies broker by broker.

for TDDI, brookfield converts USD dividends to CAD at spot rate before sending the bulk dividend to the big green on the payable date. What this means is that TDDI clients holding most brookfield companies in USD accounts - for the sole purpose of not getting dinged with broker FX fees - are, in fact, getting dinged with FX fees at the big green.

on the other hand, clients at BMO investorline who hold brookfield companies such as BAM in USD accounts, are receiving the full amount of the original USD dividend in their US accounts, with no FX problems.

it's been reliably reported that Royal bank discount brokerage has the same confusion going on with respect to Potash dividends (POT pays USD dividends.) Roybank is doing the exact opposite of most brokers with Potash divvies.

the situation is made worse by front-line broker representatives who do not understand the history or the complexity of the situation & who then deliver incorrect info to the investor clients. 

from a broker overview perspective, the situation is actually extremely messy. I also believe that the IIROC will not not create new rules to standardize USD dividend procedures. I believe that the IIROC will, instead, merely encourage the 24 or 25 companies that pay USD dividends to somewhat vaguely "do the right thing" by their shareholders, including the majority of shareholders who hold shares at brokers in street form.

to summarize: if you buy any brookfield company shares, examine the first dividend payment extremely carefully, in order to see what your broker has done with it. If it is not in the exact original USD amount, down to the penny, then there has been some alteration along the route. Try to find out how your own broker is handling this issue (wishing good luck here, because the search for accurate information will be difficult.) If necessary - depending on your individual broker's procedure for handling brookfield dividends - journal the shares to the opposite currency.

it's challenging to do the necessary research. An investor investigating how his dividend was converted should always use the bank of canada noon rate for the day of conversion. This will show him by how much his dividend varied from what should have been the case, ie whether his broker has charged an FX fee or not.

this same investor will also have to find out what date was actually used for such conversion (when brookfield is converting bulk dividends from original USD to CAD that are destined for special-case TDDI, for example, they now use a date that is closer to the payable date. Until recently, they used to convert as of the record date.)

yes indeedy, for investors it's all as clear as mud .each:


.


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