Investment Q&A

Q: There was a question about US estate taxation. Here is an article I found helpful.

https://ca.rbcwealthmanagement.com/documents/233544/0/U.S.+Estate+Tax+for+Canadians+in+2019.pdf/ba88e6ce-fb64-4abe-bb57-8a6f4c3dad22

This was a key point in the document, page 5, to focus upon:

American Depository Receipts
(ADRs) — these are exempt from U.S. estate tax because the
underlying share holdings are not U.S. corporations

Q: When taxpayers start paying in 2021 and beyond, for all the gov't covid-19 relief programs, will it be in the form of higher income tax brackets, or a return to a 75% inclusion rate on capital gains tax?
Is there a Federal budget coming this fall?

Q: Hello
I have an 18% gain in BEP.UN in a non registered account. I received the spin out shares in BEPC. Is there any tax advantage in selling the BEP.UN shares and buying the equivalent BEPC shares? Meaning, despite the cap tax gain hit, will the future taxation in BEPC be more advantageous over BEP.UN?

Also I recently bought GOOG C shares maybe by mistake. Is there any advantage to sell them and buy the A shares instead?

Thanks
2 deductions if you see fit.

Q: I would appreciate clarification about US estate taxes. I have found conflicting information on the internet as to when they apply. A BMO FAQ ( http://www.cetfa.ca/files/1551199672_bmo_etfs_-_faq_tax_season_en%20(1)%20-%20Updated.pdf ) states:

High net worth Canadians with worldwide assets exceeding US$11.4M
(2019, indexed to inflation) or have U.S. assets with a value that
exceeds US$60,000 may be required to pay U.S. estate tax on
the value of their U.S. assets. Canadian ETFs are generally are not
considered U.S. assets.

My understanding is that if Canadians held US ETFs, and their net worth was less than $11.4M US, then Canadians did not pay US estate tax. Is my understanding correct? On the internet, I have also seen references ( https://www.taxtips.ca/personaltax/usestatetax.htm ) to a $1.2M US cutoff figure before US estate taxes apply.

Thank you in advance for clarifying this information, and for this wonderful service.

Q: Tax question. If a Canadian donates to a charity not in the Canada, can the donation still be tax deductible? I would like to donate to the wild fire relief in the Pacific NW and can only find US charities accepting donations for that purpose.

Google has an easy way to donate but they say "If you are a resident of Canada, your donation may not be tax deductible. You should check your local tax regulations and consult with a local tax professional to make sure."

I don't have a tax professional so I thought I'd ask here.

Thanks!

Q: Hi 5i,
Will the CSU spin out of Topicus be a taxable event? I hold CSU in a taxable account with an as yet uncrystallized capital gain. I would prefer it if there were a way for me not to have to take the entire capital gain in the current tax year. Thanks.

Q: when reporting US-CDA conversions for capital gains and losses, does one use the trade date or the settlement date? Thanks

Q: Greetings!
RE: Trying to get the hang of Tax loss selling

Our holdings in Chartwell is down 17% and Sienna down 13%.
Comparing both on a 12 month chart seems to indicate more resilience with Chartwell.

Does it make sense to sell Sienna, take losses then on the same day buy Chartwell?

Cheers!

Q: Thank you to the entire 5I team for your wise advice which helps us make important decisions for our lifelong savings. That said. There are many uncertainties as a second wave of COVID approaches, the American elections which are already problematic, not to mention the results which could be contested and which would plunge the market into great uncertainty. Couple this with the tax season losses and you have a month of October and November that should certainly be very volatile. This leads me to ask a question of market timing, yes I know no one can predict the market but for stocks that have fallen a lot this year like those offered in this question and that I own, is it not timely to sell before sales season and buy them back or other bargains during tax season?

Thank you

Yves

Q: Which account type is best from a withholding tax perspective?

Canadian listed US equity ETFs - RRSP or TFSA

Canadian listed International Equity ETFs(ZWE) - RRSP or TFSA

US listed US equity ETFs - RRSP or TSFA

US listed US stocks - RRSP or TFSA

Q: For taxable accounts, a US-listed international ETF (or Cdn-listed ETF, with an underlying US listed ETF) is tax inefficient because the international withholding tax is not recoverable. Purchasing a similar Cdn-listed ETF which holds the international stocks directly (i.e. not a US-listed ETF) is more tax efficient as the international withholding tax is recoverable.

However, there are often advantages to buying the US-listed ETFs as they typically have much larger AUMs, and much lower MERs than their Canadian listed counterparts (which have underlying international-listed stocks). For example, the MER for VEA (US listed) is 0.05% and for VDU (Canadian listed) is 0.22%. The MER "spread" varies considerably between ETFs, and can sometimes be quite significant.

Are you aware of any formula to help an investor determine when it is best to buy the lower-MER US ETF (and pay the higher tax) and when it is best to buy the higher-MER, lower tax, Canadian ETF? Is there any rule of thumb for an investor to use, to decide that once the MER-spread exceeds a certain amount, then an investor should buy the US ETF (as the additional MER costs in buying the Canadian ETF exceed the tax advantages)?

I realize that the result can vary depending on the percentage of non-recoverable international withholding tax, the investors' tax rate, etc. However, any guidance you can provide would be most appreciated. If you are aware of a "formula" to make this assessment, that would be ideal.

If there is no formula, please assume the investor is in a 50% tax bracket, is a long-term investor, the account is taxable, and there are no currency (hedging or exchange fee) concerns.

Thank you again for this excellent service.

Q: Hi 5i,

For a taxable account, which one would be your choice ? Thanks very much!

Leo

Q: Hello,
It is OK to have QQQ, VOO and VIG in TFSA accounts ? If not, are there any equivalent Canadian ETFs that are focused on US stocks like them ? Thank you very much.

Q: If I purchase a foreign company that pays a dividend, would the interest cost on borrowed money be tax deductible?

Q: okay - if i sold enb preferred, can i buy back the stock within 30 days and be within the superficial loss rules.

cheers

Q: Hello 5i Team
I am comparing two ETF from Vanguard Canada and from Vanguard USA.
Vanguard Canada – US Total Market ETF (CA:VUN), trades in Canadian dollars on Canadian exchange, tracks the CRSP US Total Market Index. The MER is equal to 0.16 %. The 2019 distribution was composed of $0.99538 foreign income, $0.00076 ROC and $0.1593 foreign withholding tax (approximately 16 % of the total distribution, applied by Vanguard).
Vanguard USA – Total Stock Market ETF (US:VTI), trades in US dollar on US exchange, tracks the CRSP US Total Market Index. The MER is equal to 0.03 %. The 2019 distribution was US$2.8747 with no withholding tax applied by Vanguard.
Questions are:
1 – Are these two ETF essentially the same (one trades in C$ on Canadian Market, the other trades in US$ on the US Market) as they both appear to track the CRSP US Total Market Index?
2 – If I hold CA:VUN in a non-registered account, will there be withholding tax applied by my broker to the distribution?
3 – If I hold US:VTI in a non-registered account, will there be withholding tax applied by my broker to the distribution?
4 – Is the difference in the MER (0.16 % vs 0.03 %) essentially the 15 % withholding tax applied to US dividends?
5 – Which is the better ETF to hold in a non-registered account, ignoring the cost of currency conversion to purchase US dollars in order to buy US:VTI?
Thank you

Q: Good day. If I have 1000 shares of company ABC, 200 in one account and 800 in another account, can I just sell the 800 in one account, wait the 30 days and then buy back the 800 after the 30 day period? Tx

Q: I am currently in process with increasing the US$ in my TFSA. I have two questions:

1) Which "stable" stocks would you recommend to do a Norbert's Gambit. I understand it takes a couple of processing days before being able to sell the stock on the US side.
2) I have a few dividend paying stocks that are both on the TSX and NYSE - (CP, MLF, BNS). While they are Canadian domiciled, I'm curious if moving them to the NYSE causes the 15% withholding tax to kick in. I would like to keep them in a US TFSA so that I can trim/sell and reinvest in US $ but only if it makes sense. My intention is to buy US growth stocks in my TFSA moving forward (no dividend), eventually converting it into a 100% growth portfolio to maximize the account.

Thanks!

Q: Hello
WIR.UN trades on the TSX but pays its dividend in US dollars. Will this dividend by subject to the 15% withholding tax in a non-registered or TFSA account?
thanks

Q: For a non-regustered account, with the price difference at about 8 dollars would it be better overall for income to purchase BIP.UN if you had a fixed dollar amount to invest for the additional shares you would get over purchasing BEPC even considering the dividend tax credit benefit of BEPC..