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  5. HXQ: I would like to hold a NASDAQ 100 ETF long term in a non registered account. [Horizons NASDAQ-100 Index ETF]
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Investment Q&A

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Q: I would like to hold a NASDAQ 100 ETF long term in a non registered account.

1. is there a tax / bookkeeping advantage for holding one of the above over the other? (some websites imply that you have to keep records closely for American dollar ETFs, I believe they are referencing adjusted cost base at time of future sell.)

2. Is there an alternative to HXQ.CA that you would recommend? Or do. you think this is the best one at the present time?

3. Do any of your answers change if held in a TFSA?
4.Do any of your answers change if held in a RRSP?

Thanks
Ernie

Asked by Ernest on August 18, 2021
5i Research Answer:

1) No tax benefit, but as implied, some bookkeeping is required for tax purposes. Gains and losses must be reported in Canadian dolllars.

A point to note is that HXQ and HXQ.u are both total return ETFs and does not pay distributions, so in a non-reg account, there can be a tax advantage to shift income to capital gains, compared to other ETFs in the same space as XQQ

2) XQQ is a CAD-hedge alternative

3) No withholding tax for HXQ/.u as these are total return ETFs. ETFs like XQQ do not have these advantage and are subject to an additional 15% withholding tax on dividends

4) No withholding tax in an RRSP for HXQ/.u, for alternatives, in an RRSP, one can use a U.S.-listed U.S. equity ETF, as withholding taxes do not apply. In that case, alternatives include QQQ, 

 

 

Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in QQQ.