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Global X S&P 500 Index Corporate Class ETF (HXS)
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Vanguard S&P 500 Index ETF (VFV)
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Vanguard S&P 500 ETF (VOO)
Q: Good morning,
I'm looking at buying an ETF that tracks the S&P 500 for my TFSA account and am considering VFV.CA.
Withholding tax is a concern and given that VFV.CA holds US stocks, would there be a withholding tax on any of the dividends distributed and if so would you kindly recommend a few other similar ETFs that track the S&P 500 where the withholding tax is not a concern. Thank you.
I'm looking at buying an ETF that tracks the S&P 500 for my TFSA account and am considering VFV.CA.
Withholding tax is a concern and given that VFV.CA holds US stocks, would there be a withholding tax on any of the dividends distributed and if so would you kindly recommend a few other similar ETFs that track the S&P 500 where the withholding tax is not a concern. Thank you.
5i Research Answer:
There is no way to completely eliminate withholding taxes in a TFSA except by way of a 'total return' fund such as HXS which does not pay any distributions. Unfortunately, in a TFSA, there is no way to reduce the withholding tax impact. For an RRSP/RRIF, however, a way to reduce tax impact would be to use a US-listed US equity ETF, as withholding taxes do not apply. An RRSP is recognized by the IRS and is part of the Canada/US Tax treaty, while a TFSA is not.
In an RRSP, SPY would be a good starting point.