# Tax implication of investing in US stock with LIRA account



## joerand (Dec 14, 2020)

Hi,

I'm curious if theres any tax that I should know about when I sell US stocks from my canadian LIRA account with qtrade? I'm also wondering if short term trading is taxed differently if I do it from my LIRA account?

I'm also looking for advice as to what is the cheapest way to buy US stocks. I bought 2 US stocks today from my qtrade LIRA account and got charged $24CAD in fees to purchase those two stocks worth $351 each which seems excessive? The qtrade trade fee is 8.75 so that means i paid $15.25 to convert $893CAD to USD. Apparently I can't use norberts gambit with my LIRA account. I have a significant amount a money in my account and was going to purchase a wide variety of stocks but these fees got me a little annoyed. Is there a more efficient way of doing this or am I stuck paying those high fees? I feel like I'm getting ripped off.

Thanks in advance


----------



## AltaRed (Jun 8, 2009)

There is no difference buying/selling US Stocks in a LIRA, except if you don't have USD and CAD sides to your LIRA account, any USD transactions will be converted to CAD in both directions by your brokerage. Forex commissions are in the order of 1.5% or so... so your $15.25 commission isn't out of 'normal'.

I don't know how QTrade works but surely you can have both CAD and USD sides to your account. If so, then you could do a Norbert's Gambit but have to wait for settlement to complete the transaction. Example to convert CAD to USD: Buy CM in your CAD account with CAD. After it settles in 2 days, journal it over to the USD side of the account and sell it on the NYSE to get USD. You might end up holding CM for 3-4 business days until you can get it into the USD account for sale there. Note that commissions charged on USD transactions are likely denominated in USD, so that 8.75 commission is actually just over $10 CAD.


----------



## Jimmy (May 19, 2017)

Altared is right and to add.

My brokerage MD Direct is on the Qtrade platform. I trust you have a US and Cdn LIRA. What you do is buy DLR in say the CDN acct. Then go to 'My Accounts', "Transfer Funds'. Then under the "transfer between Qtrade Investor accounts' click on 'Move Securities'

Then you select :

From Acct : LIRA
To Acct: US LIRA
'Positions' : DLR
Transfer: 'All'

to move it all over.


----------



## Eclectic12 (Oct 20, 2010)

joerand said:


> I'm curious if theres any tax that I should know about when I sell US stocks from my canadian LIRA account with qtrade?


A LIRA is pretty much an RRSP with some extra restrictions. 

Whatever happens within the account is Canadian tax free, up until it is withdrawn. The withdrawal is reported as regular income. 

Where a W8-BEN form has been correctly filed so that you are identified as a Canadian tax resident (assuming one is not a US person) then the tax treaty exempts one from the US withholding tax (WHT) on dividends/interest. One still has to pay attention to what one is buying as buying a US Master Limited Partnership for the income means instead of being exempted, the US WHT is about 39% and the tax treaty does nothing about it.




joerand said:


> I'm also wondering if short term trading is taxed differently if I do it from my LIRA account?


It isn't in an RRSP so I don't know why it would be in a LIRA. 

The TFSA, OTOH there are reports of CRA determining that the short term trading is business income instead of an investment.


Cheers


----------



## AltaRed (Jun 8, 2009)

It has already been said. A LIRA is like an RRSP, except with a ceiling on withdrawal amounts. All other aspects are the same as I understand it. No withholding taxes or any other taxation within the account itself.


----------

