# BIP.UN in a TFSA



## bpither (Apr 27, 2009)

I've been watching Brookfield Infrastucture Partners L.P. for some time and thinking about putting it in my TFSA. Although Brookfield is somewhat based in Toronto this limited partnership is registered in Bermuda and lists on the TSX and Dow.

The income stream is a mix - interest income, foreign source dividends, local source dividends, eligible and qualified dividends, and short-term and long term capital gains. Since early 2010 the distribution has been raised from $1.10 to $1.46 and currently yields 5.4%

Does anyone currently hold this asset in their TFSA? To me it seems like an ideal candidate although after perusing the website tax information for 2010 I'm not sure what portion of their distributions I would actually - withholding taxes from their global operations for example - receive in a tax free savings account


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## Lena100 (Mar 16, 2014)

*Bip.us*

I am looking onto buying the interlisted stock BIP.US in my TSFA (registered account); does anybody the implications - would the US withhold the 15% on dividends. Thanks


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## BigMFfan (Feb 23, 2013)

Lena100 said:


> I am looking onto buying the interlisted stock BIP.US in my TSFA (registered account); does anybody the implications - would the US withhold the 15% on dividends. Thanks


Why don't you just buy it through the TSX? BIP.UN is exactly the same stock. If you want the dividends paid in USD and your brokerage allows it, just have the stock journalled over to the US side of your account.


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## Drauss (Nov 29, 2016)

Apologies to bump this one as well.

Just wondering if the ladies & gents who commented here were able to share their experience.
I am planning to buy both BIP and BEP.UN from TSX under RRSP.

And just want to understand if anyone got any major hits on withholding taxes.


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## humble_pie (Jun 7, 2009)

BigMFfan said:


> Why don't you just buy it through the TSX? BIP.UN is exactly the same stock. If you want the dividends paid in USD and your brokerage allows it, just have the stock journalled over to the US side of your account.




the above idea won't work well with brookfield dividends. These are all paid initially in USD by the brookfield companies, but different brokers have different procedures for charging FX on those dividends. 

potash is another with troubled, spotty FXing on its USD dividends according to which broker is holding the stock. Both brookfield & potash quaintly believe that we discount broker clients get to choose the currency of our dividends! nothing could be further from the truth, of course, but nevertheless it is what Brookfield has believed in the past & it is also what Potash believes.

brookfield, for example, has decided that all TD investor clients *want* their dividends in CAD, even though brookfield actually pays divvies in USD. Accordingly, brookfield exchanges the bulk amount of all dividends destined for TD clients once the record date has passed & the exact amount of the bulk dividend is known. Brookfield's own treasury department converts these amounts at spot rate, so no FX fee is charged.

many TD clients, however, are keeping their various brookfield shares in USD accounts, since that is the currency of the original dividend. Most of these clients have been alerted here in this forum & in articles written by Canadian Capitalist.

however, what happens with brookfield dividends at the TD is that they arrive in CAD via the CDS system. The TD system then automatically converts dividends for all clients who are keeping their brookfields in USD accounts & the TD applies its usual FX fee to those dividends.

horrors! the above FX fee isn't shown on the statements & most TD clients who own brookfield shares are blissfully aware of this setup.

the answer with brookfield, then, is to keep brookfield shares in CAD account *if* you are a TDDI client *or if* you are a client at any other brokerage that goes through the same rigamarole.

how to find out what, exactly, what your own brokerage is doing about brookfield dividends? the statements won't show any information & for sure the licensed representatives won't have a clue, these somewhat intricate facts are too subtle for them (hint: don't necessarily believe what the LRs say) 

there is an art & a science to finding out what, exactly, your broker is doing about brookfield dividends. All cmf forum knows for sure, based on what reliable members have recently reported, is that brookfield dividends should be held in CAD accounts at TDDI but they are good to go with no FX fee in USD accounts at BMO investorline. Nothing is known for sure about any other broker.

BTW there is similar trouble with POT dividends. Potash is another company with USD divvies but POT management has taken it upon itself to convert its dividends into CAD for certain brokers but not for other brokers. Royal bank is apparenty a broker that receives POT bulk dividends in CAD. On the other hand, TDDI is a broker that receives em in USD. Go figure.

everything would be infinitely better if the IIROC would have uniform regulations governing all USD dividends from canadian companies being paid to all brokers. That way, individual investors might be able to know what is going to happen. The way things are right now is impossibly messy.

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## humble_pie (Jun 7, 2009)

Lena100 said:


> I am looking onto buying the interlisted stock BIP.US in my TSFA (registered account); does anybody the implications - would the US withhold the 15% on dividends. Thanks



it depends on your broker. Brokers that are subsidiaries of big canadian banks have systems that can handle the details when shares of an canadian interlisted company are held for various reasons including USD dividends in USD account.

these big bank broker systems do not charge the USD 15% NR on such dividends. Plus for non-registered accounts, they are able to provide correct T5 tax slips showing the full eligible canadian dividend tax credits.

some of the smaller or privately-owned brokers might fail at the above 2 tasks. I recall Interactive Brokers saying about 2 years ago that their system could not track the above details, therefore would charge 15% as NR tax & also would fail to generate correct T5s. On the other hand i believe there is at least one IB client on here who has reported that IB does everything tout comme il faut.

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## Drauss (Nov 29, 2016)

thanks for all the details on the USD vs CAD dividend
i certainly had no idea that. I heard also that FFH pays in fact USD but depending if you bought it through your CAD or US account, things may turn out different.


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## Drauss (Nov 29, 2016)

Anyone had any major hits on their paid dividends on this limited partnership (in RRSP)
I guess it doesn't matter if it was bought through CAD or US account


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## My Own Advisor (Sep 24, 2012)

Nope. You will get the full dividend inside RRSP.


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## humble_pie (Jun 7, 2009)

original topic was whether or how to hold BIP.UN in a TFSA though

the recent BIP prospectus for the secondary share offering in september/16 says there is a NR witihholding tax. The TD says this tax is imposed on dividends in non-registered accounts, so this implies that the same would be imposed on a TFSA. In other words, the BIPs are best held in RRSPs or RRIFs.

the basic dividend is USD 1.56 annually, which works out to USD .39 per quarter, although i've read that recently the company slightly increased the dividend by a fraction of a penny per share.

be careful with the big green's funny-FX policy on brookfield USD dividends. Tentatively if held at the TD, i'd hold as BIP.UN in CAD account. I might buy the shares initially in either US or canadian market, but i'd journal them into canadian RRSP or RRIF prior to the next X date.

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## My Own Advisor (Sep 24, 2012)

humble_pie said:


> original topic was whether or how to hold BIP.UN in a TFSA though
> 
> the recent BIP prospectus for the secondary share offering in september/16 says there is a NR witihholding tax. The TD says this tax is imposed on dividends in non-registered accounts, so this implies that the same would be imposed on a TFSA. In other words, the BIPs are best held in RRSPs or RRIFs.


 Thanks HP.


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## humble_pie (Jun 7, 2009)

My Own Advisor said:


> Nope. You will get the full dividend inside RRSP.



true. Let's keep in mind that NR witihholding tax is an entirely separate matter from FX fees on dividends, though.

re the BIP dividend, brookfield has made some changes which will apply to the upcoming divvie payable 30 december/16. Here's what they say:

_" Beginning with the Q4 2016 distribution, registered unitholders who are Canadian residents and beneficial unitholders whose units are registered in the name of CDS or a name other than their own name (i.e., generally those holding their LP Units with a Canadian brokerage),will receive their dividends in the Canadian dollar equivalent, unless they request to receive dividends in U.S. dollars."_

https://bip.brookfield.com/stock-and-distribution/distributions/distribution-history


the above & other broad statements in the linked text - stating that shareholders holding BIP in street form at brokers can request to receive their dividends in USD merely by advising their brokers - are misleading.

the omiitted fact is that investors who do this - ie broker clients who try to advise their brokers or who hold or journal their BIP shares into US account for dividend purposes - risk that their broker will charge FX fees on those BIP dividends.

for some reason, brookfield as a company persists in the inaccurate belief that broker clients are allowed to elect their dividend currencies for all their interlisted stocks *without* any broker FX fees being charged. This, of course, is not true. 

potash is another company which has been infected with the same virus. The virus causes an unpredictable but fiery FX rash.

what is comical about the resulting itchy situations is that both brookfield & potash are very obviously & sincerely trying to help their retail investors. However, the result is that we the investors are left 100% in the dark, with no clue as to what FX fee our various brokers might or might not charge.

what would be helpful would be for the IIROC to bring out new regulations governing how all the interlisted canadian companies that pay USD dividends are to proceed. There are 24 or 25 of these companies. Theoretically, they should all proceed in the exact same manner, so that we their street investors can understand exactly what is going to happen with their dividends.

but as of today, the 24 culprits are running amok, all over the map, & the brokers are lapping up FX fees wherever they can. It's a comical sight. What can one do but laugh ... each:


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