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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I only use DLR / DLR.U for Norbert's Gambit, but didn't realize that they pay a distribution until you mentioned some fairly hefty yields in a recent reply.
And sure enough, the TMX website shows yields of 6.7% for DLR and 9.5% for DLR.U, but quarterly distributions of only $0.111 and $0.082 resp., resulting in an annual yield of only ~ 3% (with minor quarterly fluctuations).
Could you please explain this discrepancy?
Read Answer Asked by chris on December 12, 2024
Q: I thought I read somewhere that you do not have to report capital gains that are less than some threshold amount, like say $50, but when I search I find nothing about this. Is it true? If true, would that threshold be per sale or in aggregate for the year? Because I have several transactions with DLR for currency exchange which result in very minor gains/losses. A bit tedious to report especially if just pennies are involved. Also, when reporting, I suppose one has to keep the 30-day investment loss rule in mind? Thanks.
Read Answer Asked by William on April 23, 2024
Q: I would like to change a large sum of US to Canadian dollars in my trading account.
I was thinking of purchasing US stocks for companies that are traded on both Canadian and US exchanges, and asking Scotia Itrade to move the US stocks to the Canadian side of my account, thus eliminating any commission in converting this US cash to Canadian. I realize that any equity I purchase could go up or down. I'm looking for a few stable companies whose stock values don't fluctuate much. Could you rank the companies in my subject line and possibly suggest others?
Read Answer Asked by Neil on April 10, 2024
Q: Is there a US dollar version of these that would not have the 15% withholding tax?

Thanks for all your great work
Mark
Read Answer Asked by Mark on March 21, 2024
Q: If I were to use DLR and DLR.U to convert currency then would this trade need to be reported when filing taxes? I'm not sure as there would not be any capital gain or loss (am I right?) If I do need to report the trade then I assume that I could claim the commission as expenses? Please clarify. Thanks in advance.
Read Answer Asked by K on May 15, 2023
Q: Hi 5i team,

I am considering using DLR and DLR.U to buy USD and avoid the higher fees the bank charges to convert CAD to USD. But is it worth the hassle in a non-registered account because you might have a capital gain (or loss) to declare when you file your tax return the following year?

Here is an example. If I were to buy US$10,000 today my bank would charge me C$12,756. 1 CAD = 0.7839 USD

If I buy 1000 shares of DLR @ C$12.69 (plus $9.95 commission) that would cost me C$12,699.95. Five minutes later I sell 1000 shares of DLR.U at US$10.07 (plus US$9.95 commission). The proceeds of disposition would be US$10,060.95.

So US$10,000 using DLR/DLR.U would equate to C$12,624.14. That saves me C$131.86 [12,756 – 12,624.14] compared to buying it directly using the bank’s exchange rate. That is about a 1% savings.

But because this is done in a non-registered account I would have to declare the sale of DLR.U when I file next year’s tax return. From what I know you can use the “average” exchange rate for that year as per CRA, or the exact rate on the day of the transaction. So if I use the exact rate (I am guessing it would be 0.7839 as that is what the bank would charge me) I would have a capital gain of approximately C$131 to declare and then have to pay tax on that gain. At 50% tax bracket, the tax would be ~$33. So the net savings are now ~C$98. Final savings are 0.78% of the transaction. If I use the CRA’s “average” exchange rate for 2021 I could have a gain or a loss depending on what that rate is.

I can see this works fine if you do this in a registered account like an RRSP as you don’t have to declare the gain on the currency exchange, but in a non-registered account this seems like a lot of effort for small savings, at least for US$10K. Perhaps it is worth the hassle if you are converting a much large amount like US$50K, or US$100K.

Am I missing something in my example?

Paul
Read Answer Asked by Paul on August 25, 2021
Q: Yesterday, I did the Norbert's Gambit for the first time. It went smoothly. Thanks for the Q & A on it.......One learning, ask for the journalizing to be done inter-day as that then allows for DLR.U:CA to be sold shortly after the transaction is done.... I used Scotia iTrade and the result was a 1.6% saving compared to doing it at a bank like RBC........Again thanks for the "tip"....Tom
Read Answer Asked by Tom on June 22, 2020
Q: Hi Peter/Ryan
Last couple weeks read good information on Q&A section on moving money to US account using DLR/DLR.U. Out of curiosity what happens if I call TD rep and ask him to convert my existing 100 Canadian NTR shares to US NTR shares in RRSP account? I am assuming I will still have 100 NTR shares under US trading account with NYSE listed price at the time of transaction. This way I can keep my US dividends without any transaction cost. If this is the case i should be able to convert any stock which trades in both exchanges. Hope this is not a dumb question. Your expert advice please.
Thanks

Read Answer Asked by S on May 23, 2019
Q: I am intending to use DLR & DLR.U for Norbert's Gambit to acquire USD in my account in order to fund the purchase of US equities & avoid the currency exchange fees, which even at Questrade are about 2%. With the anticipated increase in US interest rates in 2017 the USD is expected to increase in relation to the CDN$ so I am considering acquiring a larger amount of USD now which I could use later for either US or CDN equity purchases. Aside from the risk associated with the uncertainty of the relative value of the USD vs CDN$, do you see any negatives with this strategy?
Read Answer Asked by Brian on February 21, 2017