On Jan 4th, I asked a question about the best place to hold VGG for tax efficiency. I was told that a TFSA or RRSP would be best. However, I read an article by Moez Mahrez in Canadian Money saver and looked at the tax efficiency table posted on the same website. If I am correct in my interpretation, both of these sites seem to recommend holding an ETF that trades in CAD but is US listed in a RRSP first and then a non-registered account because the dividend that incurs US withholding tax is recoverable in the non-registered account. In a TFSA, the dividend incurs withholding tax but it is not recoverable. Am I correct in my interpretation?
thanks for your help
If available, a TFSA or an RRSP would almost always be preferable to a non-registered/taxable account. There is no tax recovery in any registered account, but there can be some possibility in a non-registered account. Still, we would not really consider the possibility of recovery as a big considering factor. The benefit of no withholding tax at all in an RRSP and full benefit of no other taxes in a TFSA in most cases should far outweigh the benefits of recouping any withholding tax on the dividend. From a withholding tax perspective, an US-listed ETF holding securities directly is usually the most efficient.
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