Investment Q&A

Q: Are there US withholding taxes associated with the ETF's that are offered by Vanguard Canada (or any other Canadian ETF issuer) that pay a USD distribution??
Thanks

Q: Would tou confirm the last trading day for tax-loss purpose, Canadian and US ?
I’ve seen Dec 27 and Dec30 also (new settlement date?).
Thanks a lot. Great holidays to you.

Q: Hello,
I’m not sure if this question is out of scope. However my daughter and son in law are moving from Switzerland to Canada in the new year. They have some questions regarding their investments so I thought I would see if your team can help with answers.
- We have UCITS Irish domiciled ETFs so that we don’t have to pay US withholding tax - are these available in Canada?
- If not, are there any options to invest in for example an S&P 500 ETF (or other US ETFs) without having to pay withholding tax?
- do you have a brokerage account that you recommend? We currently use CornerTrader/CornerBank but they are not present in Canada so we have to switch

Q: Would any of these ETF's have year-end distributions?
Is it a good idea to just wait until the new calendar year now, to start a new position in one of these?

Q: Barry Ritholtz: Some investors have big, concentrated equity positions that have accrued big gains. Maybe it’s due to employee stock option plans. Perhaps they have some founder stock from a startup. Maybe there was an IPO or a takeover.

But suddenly they find themselves sitting on an uncomfortably large percentage of their portfolio in a single name. The challenge for investors is how can they diversify when selling shares leads to owing big capital gains? What’s an investor to do?

I’m Barry Ritholtz and on today’s edition of at the money we’re going to discuss how to manage concentrated equity positions with an eye towards diversification and managing big capital gains taxes.

To help us unpack all of this and what it means for your portfolio Let’s bring in Meb Faber He’s the founder and chief investment officer of Cambria. The fund runs 15 ETFs and manages nearly 3 billion in assets. Their new ETF is coming out in December 2024: The Cambria TaxAware ETF – symbol TAX – is a solution to address just these challenges of concentrated positions.

The above quote is intriguing. If I understand it correctly It will allow a tax deferred diversification from a single holding with large capital gains. It hardly seems possible. If I read this correctly, will this etf be available for Canadians? How do you view it?
Thanks

Q: Hello. I don’t understand how the US holding tax works, what it is and how it affects my portfolio. Can you please explain it to me. Thanks.

Q: Hi 5i,

For a US ETF in a non-registered account, would it be more tax efficient to hold HXS because it doesn't pay a distribution, versus ZSP which does? Would you recommend ZSP over HXS for any particular reason?

Thanks

Q: If I borrow to invest in a Canadian company that does not pay dividends,but has the potential to pay dividends in the future,is the interest cost still tax deductible?

Q: Question today from Indra, regarding taxes on ETFs purchased late in the year.

I'm a bit confused. My understanding was that Mutual Funds purchased late in the year did indeed become subject to income taxes accumulated by the MF during the entire year....but ETFs were not and therefore you could purchase them anytime throughout the year.

Please clarify....thanks for your help...Steve

Q: Is it advisable to buy an ETF so late in the year
I remember?? reading an article regarding taxation on distributions, namely that you are taxed on the total years distributions, even though you have not received the entire years distribution if u purchase late in the year
Appreciate any clarification you can offer on this
Or should I wait till January 2025 to purchase?
Thank you again

Q: I am looking to sell $100,000 in VFV (it is up ~70%) in a NR account to pay off debt. My income this year is $250K and I have already have ~$40K in capital gains this year. Does it make sense to sell it now or wait until January 1st to defer capital gains tax?

Q: Concerning limited partnerships like Energy Transfer , your suggested this lately: "there is withholding tax on distributions plus a 10% tax on proceeds from dispositions. In addition, there are multiple US forms that need to be filled out’".I do own the ETF AMLP in my RRSP ,and just received the dividend : there was no witholding tax or any other taxation , and the dividend did match exactly what is announced.Any explanation, plus are there forms to be filled out ?

Q: On Friday, I mistakenly sold a full position (sr. moment) in a margin account that will result in a huge capital gain. The intention was to sell half a position. On Monday, I intend to buy back half of the position realizing the price could be different from what it was sold.

Question. For tax purposes, how do I calculate the cost of this transaction? Will it be FIFO or simple cost averaging?

Thanks for your help.

Q: LPs are Taxed heavily in Canada, but is that true if bought in a RRSP or RRIF? Thanks

Q: Posted Nov 19th the 5i Stock Screener Canadian Stocks for Tax-less Selling (2024)
screened PBH as a company that meet the required criteria to sell before the end of 2024. And then on Nov 28 based on a question from a member, PBH was a stock identified for income/ dividends names, as you prefer to stick with high-quality companies with a long-term track record of consistent growth in dividends and a strong balance sheet.

Why do you suggest to sell the stock on Nov 19 and then on Nov 28 you suggest to buy the stock? Given that own this stock, and considering to sell my position for tax loss purposes, can you please clarify your position?

Thank you.

Q: Greetings:
If I hold shares of the same company in a RRIF account, as well as in 2 separate non registered accounts, and I sell some shares in the non registered account-- do the shares in the RRIF enter into the calculation of the average adjusted cost base for calculation of my capital gain or loss?

Thanks, Ben.

Q: Hi, I’m thinking of selling BCE after December 16 Ex Dividend so I will qualify for January’s payment. I’m at a loss on BCE in my cash account and plan on using this loss in future years to offset capital gains. So as not too lose the dividend income I depend on I plan on buying the same amount of BCE shares in January after waiting the mandatory 30 days. Would appreciate your thoughts on this plan. Also, on a side note do you see more downward pressure on the stock in December due to tax loss selling and ex dividend or do you feel it’s forming a base and has bottomed out in the 37-38 range . Thanks.

Q: if an investor took cash out of canada and invested it outside of Canada and never brought any of the proceeds back into the country , could one avoid any Canadian taxes ?

Q: I'm considering selling part of my BCE holding for the loss. Can I claim the tax loss benefit? I may or may not repurchase after 30 days.
Apologies if this has been asked before - just making sure as the loss would be my only reason for selling.
Thanks for your help.

Q: Hi 5i
I am a 78 year old senior.

I have a significant portion of my investment wealth in my Non Registered account.
In my TFSA I have picked up several high yielding ETF's from Purpose Investments and other companies.
Each month I transfer out the TFSA Etf monthly distributions to support my income needs.
The following year I transfer into my TFSA the current year contribution plus my prior year income distributions that were withdrawn.
I fund this annual contribution with funds from my Non Registered account managing the capital gains/losses in this process.
I have had significant capital gains in these TFSA Etfs in addition to the significantly higher yields being paid.
I am very careful to ensure that I stay within the requirements around timing of taking out funds from a TFSA and recontributing.
Having followed this plan for a few years now, I am almost meeting my annual income needs with non taxable income from my TFSA and maintaining my original capital invested plus capital gains within my TFSA.
My goal was and continues to be reducing my income for tax purposes and managing to not having my OAS clawed back.

What do you think of this strategy and is there anything you see that I could be overlooking.
Thank you for your feedback.