Q: For etfs like these held in a cash account, is the holder paying a withholding on the yield, in some way?
Is the tax withheld at the level of the etf provider, or would one see the amount withheld in one’s brokerage account.
Is the tax withheld at the level of the etf provider, or would one see the amount withheld in one’s brokerage account.
5i Research Answer:
It depends on the type of ETF. In a Canadian ETF that buys US stocks directly, the withholding tax is on payments to the Canadian account holder, and will be shown as a deduction. But VFV owns a US ETF instead of stocks directly, so there is a second level of taxation, deducted before any distribution. This chart will help explain.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in VFV.