Dear Nancy,
My current brokerage firm has advised me that U.S. dividends received by an RRSP are indeed subject to withholding tax. Your recent article is the second time I've heard that such dividends are not subject to a withholding tax.
It's difficult to believe that they could be mistaken on such an important and common situation, which seems to leave only one other difficult to believe conclusion - which is that RRSPs are not "accounts deemed to be held for retirement purposes.".
If you could spend a minute or two clarifying the above or directing me to the basis for the above it would be greatly appreciated.
Thanks in advance for your valuable time.
Ron
Dear Ron,
My suggestion is that you check with your current firm that you have signed the W8-BEN form to declare yourself a resident of Canada. We have a tax treaty with the U.S. that will exclude the withholding tax from U.S. company dividends from accounts deemed for retirement purposes.
A company's stock that trades on a U.S. exchange may not be a US-based company; it may be headquartered further afar. In that case, their dividends would have a non-residency tax deducted. Non-US companies can trade on a U.S. exchange as an ADR (American Depository Receipt).
RSPs and RIFs accounts are deemed for retirement purposes. TFSAs, however, are not.
Nancy Woods, CIM, FCSI, is an associate portfolio manager and investment adviser with RBC Dominion Securities Inc. To ask her a question, send an e-mail to asknancy@rbc.com or visit her web site at nancywoods.com
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