# British ADRs in TFSA



## PMREdmonton (Apr 6, 2009)

We all know by now there are withholding taxes on US stock dividends paid into an TFSA - about 15%.

However, what about a British ADR bought on the NYSE. My understanding is that US and UK have a tax treaty so there are no dividend withholding taxes charged by the ADR. Thus, if you purchase a US ADR for a UK company will you escape dividend withholding taxes if it is kept in your TFSA.

I'm contemplating a strategy of holding equities as follows:

1. RRSP: Canadian REITS, bonds, US equities

2. TFSA: British dividend paying stocks, American non-dividend paying stocks, Canadian non-dividend paying stocks

3. Non-registered account: Foreign (not US or UK) dividend paying stocks, non-dividend paying stocks, Canadian dividend paying stocks

In particular I was thinking about buying Vodafone, BP, RDS, Diageo, BBL for my TFSA. Does this make sense?


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## warp (Sep 4, 2010)

British ADR's indeed do not have withholding taxes taken off your dividend payment.

Note that if you intend to buy RDS, make sure you buy the "B" shares which are British.......the "A' shares are Dutch, and you may get dinged with a 30% withholding tax bite!............so buy Rbs.b

I own several UK dividend ADR stocks , including Vodaphone, 
I would suggest that you look at AstraZeneca...AZN......solid reliable and growing, and pays a nice div yield of about 5.8%, and they tend to increase the div every year.

Also be very careful when looking at div yields for UK companies, ( and euro companies too).....Many, many, financial sites including Yahoo Finance and other big ones, have the WRONG yield data on UK stocks.

This is because unlike US stocks which almost always pay the div quarterly, most UK stocks pay only twice a year...and the amount of the div payment is not the same !......Usually they will have one small div payment, then a second larger div payment, ( or vice versa).

To be sure of div yield, you must either go to the Company websites, or go to Yahoo Finance, get a quote, click historical prices, (on the left), then click "dividends only". This will show a complete div payment history.

As an example...Yahoo, right now ,today, in the quote page for AZN, shows the div amount for AZN as $1.70 per year ....and the yield as 3.7%........THIS INFO IS WRONG!

This happens because AZN paid a div in august of .85 cents, so the Yahoo site .( like many others), just doubles that and comes up with .85 X 2= 1.70
yearly dividend amount which equals a 3.7 % yield.

However AZN payed a much larger dividend in Feb of $ 1.85 !! So the div payment for 2011 was in fact $ 1.85 + .85 = $2.70, which means a yield of 5.8%!

AZN will pay another larger dividend in Feb 2012......lets assume they again pay 1.85 in Feb 2012, ( although I bet they raise it)
Yahoo and other sites will now show a dividend amount for AZN of 1.85 X 2 = $3.70 !! At today price of around $46, they will show a yield of 8.04 %, which will ALSO be wrong!!

This happens all the time so be careful!

Good luck.


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## Toronto.gal (Jan 8, 2010)

PMREdmonton said:


> there are withholding taxes on US stock dividends paid into an TFSA.


Yes, US & other stocks because there are no reciprocal tax treaties for saving accounts, which is all a TFSA is. 

The reciprocal tax treaties apply to pension plans like RRSP & other, but not to savings accounts of any type & such treaties don't apply to all countries either. 

- The only advantage given to TFSA's, is that those accounts are tax-free, so you don't have to report any capital gains/losses/dividends on your income-tax. 

- Depending on one's tax-rate however, it could still be more favourable to hold such stocks within a TFSA [consider the tax % being withheld on the dividends vs your personal tax-bracket, which would likely be higher than 15%, so you need to do the math under which scenario you would come ahead]. 

- Keep in mind that you can't claim foreign tax credit for the amounts withheld as the account is already tax-free [you can't claim this on tax-deferral accounts either].

You might want to review this list of countries that don't charge taxes, however, keep in mind this applies to the US and not necessarily Canada.

http://seekingalpha.com/article/248039-withholding-tax-rates-by-country-for-foreign-stock-dividends


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## KaeJS (Sep 28, 2010)

I don't want to hijack the thread, but my question is related:

I own 50 shares of MT (ArcelorMittal) on the NYSE. I received a dividend payment on Friday of $10.40 for these 50 shares.

Can anyone explain how I received $10.40?

I cannot seem to figure this out. I keep calculating $9.375?

http://www.arcelormittal.com/index.php?lang=en&page=613

And will I need to pay tax on this? It doesn't say "Tax Withheld" like foreign dividends usually do. This is my first time receiving a dividend from an ADR.


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## Toronto.gal (Jan 8, 2010)

KaeJS said:


> 1. I cannot seem to figure this out. I keep calculating $9.375?
> 2. And will I need to pay tax on this? It doesn't say "Tax Withheld"


1. That amount is correct, however, you need to look up the exchange rate between both currencies.
2. Is the company's HO located in Luxembourg? If so, I believe the tax is 15% and just because you don't see the tax taken out separately, it does not mean that taxes were not withheld.


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## KaeJS (Sep 28, 2010)

Toronto.gal said:


> 1. That amount is correct, however, you need to look up the exchange rate between both currencies.
> 2. Is the company's HO located in Luxembourg? If so, I believe the tax is 15% and just because you don't see the tax taken out separately, it does not mean that taxes were not withheld.


1. I still can't figure it out. On the ArcelorMittal website, it says the exchange rate is 1.3480. So wouldn't I complete the math by 1.3480 (exchange) x 0.1390949 (dividend) x 50 (shares)?
_
"FX Exchange Date for conversion for USD to Euros: 17 November: 1.3480 (gross dividend per share in Euros: 0.1390949)"_

Or am I also missing the conversion from USD to Canadian, which is why my figure is incorrect? There's no way a USD/CAD conversion would be off a dollar on such a small amount. 

2. T.Gal, yes, headquarters are in Luxembourg. 

ArcelorMittal website says:
_
"A Luxembourg withholding tax of 15% is applied on the gross dividend amounts"_


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## humble_pie (Jun 7, 2009)

cmf forum pioneers homesteading the challenging ADR-withholding-in-canadian- tfsa-rrsp-cash-margin-accounts should really stop now & pour themselves a premature glass of new year's bubbly & pat themselves on the back. Nearly everyone has got it dead right, except warp i think might be a bit misleading when he says there is no NR withholding on US ADRs that are based on british stock.

there are so many what-ifs in ADRland that one could say the first step in clearing the region for cultivation is removing the landmines.

but i'd agree w those who say that 1) overseas ADRs may or may not carry withholding taxes arising from their country of origin, as per the tax treaty between country of origin & the US of A;

and 2) such overseas taxes are unrecoverable & unclaimable;

and 3) the US will, in turn, impose withholding taxes on ADR dividends delivered to canadian accounts other than rrsp accounts, save & except for certain dual citizens who can convince their brokers that they are exempt from the NR withholding ...

tea leaves are much easier, said the march hare to alice.


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## PMREdmonton (Apr 6, 2009)

humble_pie said:


> cmf forum pioneers homesteading the challenging ADR-withholding-in-canadian- tfsa-rrsp-cash-margin-accounts should really stop now & pour themselves a premature glass of new year's bubbly & pat themselves on the back. Nearly everyone has got it dead right, except warp i think might be a bit misleading when he says there is no NR withholding on US ADRs that are based on british stock.
> 
> there are so many what-ifs in ADRland that one could say the first step in clearing the region for cultivation is removing the landmines.
> 
> ...


HP, are you sure the US will charge another layer of dividend withholding taxes on passing the money onto Cdns as the income had already been taxed at source? 

If it only occurs sometimes, how often do you estimate that to be?

When I've asked the question elsewhere from people who had held British ADRs they had claimed there was no withholding taxes at all applied - none from the British and none from the Americans. The particular company in question then was Vodafone.


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## doc987 (Nov 23, 2011)

PMREdmonton said:


> We all know by now there are withholding taxes on US stock dividends paid into an TFSA - about 15%.
> 
> However, what about a British ADR bought on the NYSE. My understanding is that US and UK have a tax treaty so there are no dividend withholding taxes charged by the ADR. Thus, if you purchase a US ADR for a UK company will you escape dividend withholding taxes if it is kept in your TFSA.
> 
> ...


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## humble_pie (Jun 7, 2009)

am i ever sure about anything, asked the March Hare.

oh, but you should be sure otherwise however will you know where you are going, said Alice.

the only thing i can be sure of, said the March Hare, is that we finally got the dormouse into the teapot for a while, at least until the tea party ends.

buyandholdneverbuyandhold, murmured the teapot.

but you were saying about withholding tax on british ADRs that pay dividends, asked Alice. Is there a US withholding tax on those dividends when they are paid to a non-pension account in canada.

dear child, now you have quite confused me, said the March Hare. The only thing i believe for sure is that the eye are ess will always tax every single thing it can get its hands on & even some things it can't. And after all the ADRs do trade on US stock exchanges, so it's easy for washington to grab the money.

but i really want to know, persisted Alice. Is the IRS assessing a NR withholding tax on foreign ADR dividends paid to canadian accounts that are not pension accounts.

from inside the teapot, the voice continued to murmur. Ask Warp, it said. Ask Warp if his beyootiful long-legged british beauties are inside his rrsp or outside roaming free in the wild.


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## warp (Sep 4, 2010)

I will post this reply in plain english......( it just seems easier that way )

ADR's of UK companies bought in US will NOT have any withholding taxes taken off your dividend payment, no matter which account you hold them in.

This dividend amount will be taxable if held in a cash account, and will have to be converted to $can from $us. It is treated as regular income, same as interest.

I have heard that the UK gov't does hold onto a small amount , in UK, brfore the div is passed along to you, but have never been able to confirm this.

Vodaphone, which I own, started a little while ago to charge holders of ADR's a small charge per share of the dividend paaid to ADR holders, to compensate them for their costs involved. As this is a small amount and taken off the dividend before you receive it, it is nothing to worry about.


By the way, Humble, I did , in fact, years ago, live in London, England, with an absolutely beautifull, long-legged English model. We had a small flat in Chelsea, right on the corner of the King's Road, and lived alomost directly across the road from Margaret Thatcher on Flood Street, She was leader of the opposition then, not yet PM. I have quite nice memories of my time there.


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## m3s (Apr 3, 2010)

I guess many years ago? (In plain English it's actually Vodafone)

and humble's last post makes me wonder what ever happened to Henny penny, agent Fox and Farmer centralbank??


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## screwjack (Dec 14, 2011)

PMREdmonton said:


> HP, are you sure the US will charge another layer of dividend withholding taxes on passing the money onto Cdns as the income had already been taxed at source?
> 
> If it only occurs sometimes, how often do you estimate that to be?
> 
> When I've asked the question elsewhere from people who had held British ADRs they had claimed there was no withholding taxes at all applied - none from the British and none from the Americans. The particular company in question then was Vodafone.


An ADR's dividend tax are withheld at source varied by the company's domicile. For example, if you hold China Mobile (CHL), 10% of the dividends you receive will be withheld at source. Put it simply, the dividend withholding tax of a non-US company's ADR has nothing to do with US. A UK domiciled company, provided that it is not a reit, does not have any dividend tax, so no amount is withheld from dividends.

Incidentally, if you manage to get an incompetent broker like I did, and if you have Canadian ADRs in your account, you could have tax deducted from your dividends. Most Canadian brokers would recognise that you are a Canadian resident and refund the amount withheld right the way. (Some don't even record it and just pay you the full dividend.) But I was unfortunate enough to get burned once. To this date, I still don't know how to reclaim the amount withheld. (Unlike the US tax return, there isn't any line for tax withheld. And it doesn't exactly apply to foreign tax credit as it was tax paid to the Canadian government.)

As a side note, dividends from ETFs listed in US but focusing on non-US securities are taxed at the US rate 15%, but you can actually reclaim it from the US government as long as the holdings in the ETFs are non US.


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## warp (Sep 4, 2010)

screwjack said:


> As a side note, dividends from ETFs listed in US but focusing on non-US securities are taxed at the US rate 15%, but you can actually reclaim it from the US government as long as the holdings in the ETFs are non US.



Really?.....that's the first time I have heard of this.

So if one were to buy a Europe or Asia or Emerging market based ETF in New York, and if there were taxes withheld on dividends, you could ask the US govt to return it to you??

Could you please provide further info on how an investor might reclaim such taxes from the US government?

I will thank you in advance.


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## screwjack (Dec 14, 2011)

warp said:


> Really?.....that's the first time I have heard of this.
> 
> So if one were to buy a Europe or Asia or Emerging market based ETF in New York, and if there were taxes withheld on dividends, you could ask the US govt to return it to you??
> 
> ...


Yes, many people including me have done it before. Since the tax withheld is technically not legitimate as the incomes are not US sourced, some (American) brokers even refund the dividend tax automatically at the year end, which saves you the hassle to deal with IRS, but I haven't heard of any Canadian ones who do it. Heck, most Canadian brokers don't even know what a Form 1042-S is. 
Most Canadian opt to claim the tax back from CRA using the foreign tax credit, but if you don't have enough income during the year, or if you're holding the shares in a TFSA, then the only way to do it is claiming it directly from the US government.
The form you need is Form 1040NR, but you will need to apply for TIN first. Every year all it takes to get your money back is a few lines of numbers and then cost of a US stamp. (I don't know if one can do it electronically now. I haven't tried it myself yet.)
For European equities/bonds ETFs, it's actually better to buy them from LSE. Most of the ETFs listed there are irish domiciled, no dividend tax is paid inside the funds due to EU treaties and no dividend tax is withheld from funds' payouts, and these ETFs generally have lower TER than the American or Canadian counterpart. 
Also note that when you hold an international ETF listed here or in US, you are paying dividend tax inside the fund, on top of whatever tax withheld from the distributions of the fund, and it's extremely difficult to reclaim them even if you are entitled to a refund.


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## warp (Sep 4, 2010)

screwjack said:


> Yes, many people including me have done it before. Since the tax withheld is technically not legitimate as the incomes are not US sourced, some (American) brokers even refund the dividend tax automatically at the year end, which saves you the hassle to deal with IRS, but I haven't heard of any Canadian ones who do it. Heck, most Canadian brokers don't even know what a Form 1042-S is.
> Most Canadian opt to claim the tax back from CRA using the foreign tax credit, but if you don't have enough income during the year, or if you're holding the shares in a TFSA, then the only way to do it is claiming it directly from the US government.
> The form you need is Form 1040NR, but you will need to apply for TIN first. Every year all it takes to get your money back is a few lines of numbers and then cost of a US stamp. (I don't know if one can do it electronically now. I haven't tried it myself yet.)
> For European equities/bonds ETFs, it's actually better to buy them from LSE. Most of the ETFs listed there are irish domiciled, no dividend tax is paid inside the funds due to EU treaties and no dividend tax is withheld from funds' payouts, and these ETFs generally have lower TER than the American or Canadian counterpart.
> Also note that when you hold an international ETF listed here or in US, you are paying dividend tax inside the fund, on top of whatever tax withheld from the distributions of the fund, and it's extremely difficult to reclaim them even if you are entitled to a refund.


Thanks for this reply...however more info is needed for people like me who are trying to get a handle on this.

Exactly what is a TIN??

I assume one can get a Form 1040NR from the IRS website. Is this right?

( also you say most brokers here don't even know what a Form 1042-S is.
Hell, neither do I !! what is it? and why would a Canadian investor want to know?)

Thanks for your info.


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## screwjack (Dec 14, 2011)

TIN stands for Taxpayer Identification Number. You can apply it - which requires a separate form btw - when you file your first tax return with the IRS. This will take a bit of time and the original copy of your passport, but the process is fairly painless.

Form 1042-S is the american couterpart of T5, but it is specifically for showing tax withheld by the US government. You don't really need it, but you've got to show (preferably a breakdown of) the exccess tax withheld by the US government when you are filing you tax. Usually I just use my yearend investment statement along with T5 when my broker doesn't have it.

Google Form 1042NR.

Once you get your TIN, you can file your returns retrospectively. The US government will pay you interest on the amount they've owed you over the years. Anyhow, I'll let you figure out the rest. Have fun!


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## humble_pie (Jun 7, 2009)

he's out of his skull said the March Hare to Alice.

beyond mad agreed the Mad Hatter.

foxy murmured the teapot.

even i can understand you, said Alice. Why would Warp the quintessential middle canadian with sentimental memories of living in chelsea with leggy british birds during his salad youth, why on earth would Warp sign up for guantanamo bay eye are ess.

exactly so, he's a non-resident alien, said the March Hare. Last thing he needs is a tee eye enn.

americans have no business taxing non-resident aliens, said the Mad Hatter.

ah, but they think they do when the NR alien carries on even a smidgin of business within her borders, murmured the teapot.

silence dormouse shouted the March Hare, banging down the teapot lid.

but you can see dormouse's point said Alice. Washington is broke & there are all those foreigners investing in US assets who are just waiting to be taxed, as soon as they can figure out how in guantanamo bay.

coming soon to an estate near you, murmured the teapot. Foreign alien non-resident estate taxes.

oh dear, i was so hoping we had silenced him when we stuffed him in the teapot, said the March Hare.

transaction taxes on foreign-owned US treasury bills, murmured the teapot.

pay him no mind, said the March Hare, passing the plate of strawberry sandwiches to Alice.

i'm only trying to save the world one investor at a time, murmured the teapot.


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## cardhu (May 26, 2009)

PMREdmonton said:


> HP, are you sure the US will charge another layer of dividend withholding taxes on passing the money onto Cdns as the income had already been taxed at source?


PMR … to clarify a few of the misconceptions posted upthread ... there should be no additional layer of US withholdings on an ADR, regardless of what type of Cdn account its held in ... dual citizenship has nothing to do with that ... the IRS applies NRA withholding to US-sourced income, and dividends distributed through an ADR are generally not US-sourced ... there can be exceptions, of course, but at the risk of stating the obvious, those exceptions are _exceptions_ ... ergo, the default position for ADR dividends is that they are not subject to US withholdings ... note, however, that just because there shouldn’t be a US withholding doesn’t mean that there won’t be one … mistakes and incorrect withholdings can and do occur. 

As you know, if the country of origin applies a withholding then that amount would be withheld before the monies ever reach North America, and an RRSP/RRIF would get no special treatment in those cases ... such foreign withholdings in a TFSA or RRSP are unrecoverable but in a taxable account they obviously are claimable and recoverable through the foreign tax credit and (if necessary) its cousin the foreign tax deduction. On the other hand, if US tax were to be incorrectly withheld, then that amount would not be eligible for tax credit. 

Incidentally, Canadian residents qualify for reduced foreign withholdings in some cases, even though the ADR dividends pass through the US on their way to your Canadian account. Gotta do your homework related to the specific countries and companies you’re interested in. 



PMREdmonton said:


> 1. RRSP: Canadian REITS, bonds, US equities
> 2. TFSA: British dividend paying stocks, American non-dividend paying stocks, Canadian non-dividend paying stocks
> 3. Non-registered account: Foreign (not US or UK) dividend paying stocks, non-dividend paying stocks, Canadian dividend paying stocks
> ... Does this make sense?


Not really … the biggest red flag is that you have foreign dividend payers in your non-reg account, and that is by far the worst place for them. Ideally, they should go into either the TFSA or RRSP. 

Why does your non-reg account exist? Is it …
(a)	because you don’t have enough combined RRSP/TFSA room to shelter the entire portfolio, or
(b)	because you perceive some advantage in holding certain assets in a taxable account. 
If your answer is (b), then you should take a step back and reevaluate your perceptions, but if your answer is (a), then the simple rule of thumb is to place in the non-reg account whichever assets will be punished the least by being there ... for some folks, those might be Cdn dividend paying assets, and for others it might be pure capital gain producers ... but foreign high-dividend payers will rarely, if ever, float to the top of that list, as in many cases their dividends are taxed at worse-than-ordinary-income rates.

There is no perfect distribution ... you can’t know in advance how much tax each category would be exposed to because you can’t know in advance what your returns will be ... the best you can do is to avoid the obvious mistakes (like holding foreign high-div payers in a taxable account) and come up with a mix that has a reasonable probability of keeping the tax bill to a minimum, over the course of your entire life. 

There are no other glaring red flags, but there could be some other adjustments, depending on a few things ... some of the factors to consider include ... 
1.	Between RRSP & TFSA, which is your preferred vehicle for high-growth assets? For most people, the RRSP would be the place to concentrate high-growth assets, so that it can grow as large as possible. For some, the TFSA may be the place. Which is it for you? 
2.	With your non-dividend equity picks, are you swinging for the fences, or are you aiming for a pattern of singles & walks, with the occasional double? 
3.	How frequently do you trade?
4.	Which bracket are you in? Unless you’re in the lowest bracket, Cdn dividends are taxed at punishing rates in a non-reg account, and depending on your answers to q.2 and q.3 above, they might be better placed in the TFSA or RRSP. 
5.	Any leverage in the picture?


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## cardhu (May 26, 2009)

KaeJS said:


> Can anyone explain how I received $10.40?
> I cannot seem to figure this out. I keep calculating $9.375?...
> ... On the ArcelorMittal website, it says the exchange rate is 1.3480.


Solved your puzzle yet? It seems to me that on 50 shares, you should have received US$7.97 ... (gross dividend of US$9.38, less a 15% Luxembourg withholding tax) ... the 1.348 exchange rate on the MT website is irrelevant to you, unless you purchased your shares on one of the European exchanges. If you bought your shares on the NYSE, then the Euro/US$ exchange rate is irrelevant. If you hold your shares in Cdn$ account, then the Cad/US exchange rate would apply but I agree that that couldn’t be enough to account for the bulked up amount you actually received. 



KaeJS said:


> And will I need to pay tax on this?


If you hold it in a taxable account, then YES, foreign dividends are taxed as ordinary income ... and if you hold it in a TFSA or RRSP, then NO. 



Toronto.gal said:


> Depending on one's tax-rate however, it could still be more favourable to hold such stocks within a TFSA ... you need to do the math under which scenario you would come ahead].


There are not many absolutes in personal finance/investing, but this is one of the exceptions ... if you’re measuring solely by tax payable on the dividend income, then you will *never* come out ahead by placing such stocks in the taxable account, versus TFSA ... it is *mathematically impossible* to pay less tax on foreign dividends in a taxable account, than in a TFSA, regardless of your personal tax bracket. 



Toronto.gal said:


> ... there are no reciprocal tax treaties for saving accounts, which is all a TFSA is.
> ... The reciprocal tax treaties apply to pension plans like RRSP & other, but not to savings accounts


Reciprocal tax treaties apply to countries, not pension plans ... and yes, savings accounts like TFSA are covered in the Canada/US tax treaty. The treaty is the reason withholdings in a TFSA are reduced (for people who qualify and who have completed the requisite paperwork) to 15% for US dividends, and 0% for US interest, from the standard 30% 



screwjack said:


> ... the tax withheld is technically not legitimate as the incomes are not US sourced
> ...
> ... Most Canadian opt to claim the tax back from CRA using the foreign tax credit


But if the US withholding is not legitimate, as you say, then the amount is technically not eligible for the foreign tax credit. However, this is likely one of those things that slips through the cracks, in small amounts, thousands of times a year.


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## Toronto.gal (Jan 8, 2010)

cardhu said:


> 1. if you’re measuring solely by tax payable on the dividend income, then you will *never* come out ahead by placing such stocks in the taxable account, versus TFSA ...
> 
> 2. Reciprocal tax treaties apply to countries, not pension plans ...


1. No, I don't measure like that and feel I understand the tax consequence rather well, unfortunately there is only so much room in the TFSA/RRSP accounts.

2. You're splitting hairs now; I'm sure readers understood what I was trying to say, but thanks for clarifying just the same.


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## warp (Sep 4, 2010)

QUOTE from HUMBLE: "with sentimental memories of living in chelsea with leggy british birds during his salad youth"

Boy you sure that that right! ( except that I was dirt poor back then)

Anyway, heres another question.

I own 2 stocks headquarterd in Switzerland, purchased in New York.
Both pay dividends.

On one, there is NO withholding tax.
On the other there is 30% withholding tax!

Any ideas how this could be???

I was hesitant to call my broker, because knowing how the world works, instead on carging me zero withholding taxes on both, they will start instead to charge me 30 % on both.


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## warp (Sep 4, 2010)

Sorry: correction.....on the one I pay 35% witthholding tax!!


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## screwjack (Dec 14, 2011)

cardhu said:


> But if the US withholding is not legitimate, as you say, then the amount is technically not eligible for the foreign tax credit. However, this is likely one of those things that slips through the cracks, in small amounts, thousands of times a year.


Tax withheld by US in this case is real money you've paid to the US government, a foreign entity. So I don't see a problem claiming it through the foreign tax credit, whether the tax was held rightly or wrongly. (Unless I've missed something about the FTC.) 
Besides, people just don't like the hassle of dealing with the IRS directly, so they just go to their own government instead. And probably becease of this, like you said, the CRA just let them slip through, even though it might not be proper.


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## screwjack (Dec 14, 2011)

warp said:


> QUOTE from HUMBLE: "with sentimental memories of living in chelsea with leggy british birds during his salad youth"
> 
> Boy you sure that that right! ( except that I was dirt poor back then)
> 
> ...


Companies can headquarter in one country and domicile in another, so you want to make sure of what their tax bases are. What does the IR depts at your companies say about dividend tax withholding?


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## humble_pie (Jun 7, 2009)

warp you know how we cmfers are crazy about bureaucracy confusion red tape & endless paper fiddling. So here is a tale of tax authorities that is going to warm your heart.

switzerland has an obscure law that a foreigner who can prove he has declared his swiss income to his government and who can get the tax authority of his nation to sign the relevant swiss form confirming that said taxpayer did indeed declare & pay tax upon his swiss income ... will ... actually ... get his 35% back ... from ... the ... swiss ... government.

with their storied efficiency the swiss will even send you the form that the CRA (& also the provincial tax authority if applicable) must sign in order for this little miracle to take place.

alternately - even though jack is obviously an IRS agent secretly embedded here in order to lead canadians to their cross-border fiscal doom - his post has merit when he says contact the non-withholding swiss company's IR group & ask them to explain.

as i recall your broker is bmo, it's unlikely nesbitt would make a mistake.




a


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## PMREdmonton (Apr 6, 2009)

cardhu said:


> Not really … the biggest red flag is that you have foreign dividend payers in your non-reg account, and that is by far the worst place for them. Ideally, they should go into either the TFSA or RRSP.
> 
> Why does your non-reg account exist? Is it …
> (a)	because you don’t have enough combined RRSP/TFSA room to shelter the entire portfolio, or
> ...


I thought about putting foreign dividend payers there because I may already be taxed 25% of the income in tax sheltered accounts. Thus I put them there because my marginal tax rate is say 35% so I will pay 10% extra tax. This is compared to other income sources which may be entirely free of taxes if held in a TFSA (i.e. British ADR).

The reason why my non-reg account exists is that there is more savings than can be accomodated in my TFSA/RRSP. They are maxed out.

I am in the top tax brakcet or at least I was until I started a CCPC this year. I will still be in the top bracket this year but not next year, I guess.

I have saved money in a CCPC that is sitting around doing nothing at the moment. I may try to move some of that money out into a non-reg acct if it makes sense so long as I don't push myself into the top bracket. I can pay dividends to my wife that is in excess of what money we need to live off of while keeping her in a lowish tax bracket.

I don't use leverage.

I make only a couple of trades per month. I am gradually accumulating positions.

I try to use my TFSA for high growth purposes in general and use my RRSP for more stable sources. I would suggest in the TFSA I swing more for doubles than home runs and RRSP is for walks and singles.

Thanks for the advice you have given and any further you may offer.


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## screwjack (Dec 14, 2011)

humble_pie said:


> switzerland has an obscure law that a foreigner who can prove he has declared his swiss income to his government and who can get the tax authority of his nation to sign the relevant swiss form confirming that said taxpayer did indeed declare & pay tax upon his swiss income ... will ... actually ... get his 35% back ... from ... the ... swiss ... government.
> a


I know we, like the brit and the american, are entitled to reclaim 4/7th of the tax withheld from the swiss authority directly, but I'm not aware of any way to reclaim the full amount.

Anyhow, I don't really know why we are dealing with all these dividend tax rubbish. One can easily avoid paying divdend tax using derivatives. Sophisicated traders and high net worth individuals are actively pursuing this route, so I imagine only the poors pay taxes.


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## warp (Sep 4, 2010)

screwjack said:


> I know we, like the brit and the american, are entitled to reclaim 4/7th of the tax withheld from the swiss authority directly, but I'm not aware of any way to reclaim the full amount.
> 
> Anyhow, I don't really know why we are dealing with all these dividend tax rubbish. One can easily avoid paying divdend tax using derivatives. Sophisicated traders and high net worth individuals are actively pursuing this route, so I imagine only the poors pay taxes.


I am so fed up with ALL gov'ts worldwide and their loony tax laws, ( including our own).

I just use the FTC, ( foreign tax credit), and try to recover what I can.
I am certainly not about to tell the IRS, or any other gov't who I am, or what my income is, etc. ( Think about the zany US estate tax laws on non-citizens!!)

As for the Swiss tax withheld, it amounts to a few hundred dollars a year , at most, so its hardly worth all the bother

I did call my broker, and they gave me some lame explanation about whether the stock is an ADR or sold over the counter, ,,,blah , blah , blah.
I'm sure they have no clue why this happens either, but the service they always give me is first rate.

It seems like all governments worldwide are in debt up to their eyeballs, and all also have lunatic tax laws to boot, causing regular folk like us a lot of grief.


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