Dividends and Taxes in Canada

[Cliff_N]

https://www.suredividend.com/canadian-taxes-us-investors/

Good article and good news here:

Owning Dividend Stocks in Retirement Accounts
If you have the contribution room available, owning Canadian stocks in U.S. retirement accounts (like a 401(k)) is always your best decision.

There are two reasons for this.

First of all, the 15% withholding tax that is normally imposed by the Canada Revenue Agency is waived when Canadian securities are held within U.S. retirement accounts. This is an important component of the U.S.-Canada tax treaty that was referenced earlier in this tax guide.

The second reason why owning Canadian stocks in retirement accounts is the best decision is not actually unique to Canadian investments, but its worth mentioning nonetheless.

The remainder of the “normal” taxes that you’d pay on these Canadian stocks held in your retirement accounts will be waived as well, including both the capital gains tax and dividend tax paid to the IRS.

This means that holding Canadian stocks in United States retirement accounts has no additional tax burden compared to owning domestic stocks. In other words, owning Canadian stocks in a U.S. retirement account is the same as holding U.S. securities in the same investment account.

[Lbark]

Thanks, Cliff. I hold SRUUF which is sprott uranium trust in my regular account. no dividends on it, but capital gains. Am i liable for withholding when i have cap gains and is there way to get credit for the wittholding?

[dan_s]

Canada does not withhold income taxes on capital gains because they have no way of knowing your basis in the stock.

Any taxes that Canada withholds are refunded as a foreign tax credit when you file your US tax return.