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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: My investment income has been bumping up against the OAS clawback level the last couple years (damn that dividend gross-up!), so I have moved some investments into reits and ETFs with high return of capital to keep reportable income down. Aside from the obvious - that ROC becomes capital gains when the stock is sold - are there some negatives about ROC or high ROC stocks of which I should be aware?
Thank-you
Read Answer Asked by grant on July 07, 2021
Q: I see your report on CDN companies paying US dividends and was wondering if currency gains are allowable in tax free accounts. If one were to accumulate US$ in the account and then flip to CDN$ at a profit would this put you offside with CRA?
Read Answer Asked by Robert on July 02, 2021
Q: Dear 5i,
If I hold BIPC.CA, BIPC.US, BEPC.CA, or BEPC.US in my non-registered Canadian account. do I have include them if I have to file Form T1135.
If yes what is the country code?
Read Answer Asked by Ian on June 30, 2021
Q: Hi. I’m writing in response to Andrew’s earlier question regarding whether or not he needs to report BEP.UN on his T1135. I’d looked into this earlier this year for BEPC, BIPC, BIP.UN and BEP.UN. Brookfield’s web site addresses this specifically. Below is the link, and direct quote.

https://bep.brookfield.com/stock-and-distribution/tax-information

“Are units considered foreign property for the purposes of the Canada Revenue Agency T-1135 Form – Foreign Income Verification Statement?
No.”

Hope this assists.

Regards
Read Answer Asked by Cory on June 29, 2021
Q: Hi,

keeping in view the US Withholding tax on canadian investors.

If one has to hold US S&P 500, US mediam &small cap, US IT/technology ETF in canada.

Then which ETF would be be the best for a TFSA and cash account. ( I believe in a RRSP it does not matter ).

I currently hold SPY,VFV, IWO, VGT and QQQ in my TFSA and cash account. Do you think they are OK, or will you recommend some equivalent more efficient ETF's for exposure these sectors.

Keeping in view the difference between a TFSA and cash account, please suggest suitable ETF's for each, which would mirror SPY, VFV, VGT, IWO and QQQ.

Thanks
Harry
Read Answer Asked by HARRY on June 14, 2021
Q: This question is about Capital Gains Tax. Over a 5 year period I ended up buying a single stock at different prices in 3 separate accounts...Cash, Tax Free and Rif. So when I sell I am not sure what buying price to use. For example if I sold the stock in the cash account do I use the purchase price in that account or must I use an average of the 3 accounts. I guess the purchase price does not matter in the case of the Tax Free or Rif? Thanks for your clarification!
Read Answer Asked by Ernest on June 10, 2021
Q: Further to my earlier question about ROC in a registered account, the last paragraph of your reply seems to suggest that there is some value of this payment in a registered account but I don't see it. The ROC simply reduces the base cost but this has no meaning in a registered account as it is not used when an equity is sold. ROC payments can be substantial and it is a shame to lose them.
Read Answer Asked by richard on June 07, 2021
Q: Further to Bill's question today about ROC payments, it seems that if such a payment is made in a registered account its value is lost entirely as there is no capital gain to be had. Is there anyway to recover some or all of this value or are we better to avoid stocks in a registered account (at least for income purposes) that principally pay ROC?
Read Answer Asked by richard on June 04, 2021
Q: Peter
if I buy a US dividend fund in my RIF or my wife's RRSP, do they have a withholding tax on the dividends paid out? What about a Tax Free account?
Thank you
Ronald
Read Answer Asked by Ron on June 04, 2021
Q: Can you clarify about companies that pay part of their dividend through "Return of Capital". Are these considered a poor investment because they are just giving you your own money back? Also, what happens when you have had 100% of your original capital investment returned to you - do you still continue to receive "return on capital" even though you have received all of your original investment back or is the distribution then reduced as you no longer have any of your original capital left to return?
Thanks.
Read Answer Asked by Bill on June 03, 2021
Q: In my RIF, if I sell shares in a company with capital gains and then use those gains to buy shares in another company for my RIF, will I still be paying taxes on the capital gains the next tax year?
Read Answer Asked by Fred on June 01, 2021
Q: I am thinking of investing in VXC (or maybe XAW) in my RRSP. I understand that since this is a fund of funds and some of the underlying ETFs are US based, that there will be foreign withholding tax of some amount. To avoid the tax, am I better off to invest in the underlying ETFs (Canadian versions only) specifically VFV, VIU and VEE? (small cap I could not find). How much of an issue is the foreign withholding tax? Is it small enough to not bother buying all these underlying ETFs directly? Your thoughts please.
Read Answer Asked by David on May 28, 2021
Q: Recently you had a very good article on the tax implications of what type of accounts one has investments in. Unfortunately unable to locate article. Wondering in particular of holding US funds in the US portion of a TFSA - good or bad idea.? Also please explain your answer of March 10/2021 - that BAM.A works better in a TFSA - rather than a RRSP.
Read Answer Asked by Lorraine on May 28, 2021
Q: Although I currently hold VYM and VIG in my RRSP, SCHD has been on my radar for a few years and would appreciate your thoughts on adding this particular US$ ETF in my US$ Non Registered account. More specifically,
Q1. Would the withholding tax be eligible for the foreign tax credit when filing my tax return,
Q2. Would the US dividends be taxed as income, and
Q3. Of the three ETFs mentioned above, which one would you recommend for a US$ Non Registered account and your reason for the recommendation.
As usual, your sage advice is much appreciated.
Read Answer Asked by Francesco on May 27, 2021
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