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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: I am not quite clear on tax implications for the following scenario. Could you please confirm (or not !) if I am correct or if there are other implications ?

If, in a Non-Registered Account, I hold a Canadian-domiciled ETF or Mutual Fund that owns a mix of Canadian, U.S. and possibly other international companies, then:

1) 15% of the U.S. company dividends will be withheld by the U.S. (Or whatever equivalent withholding tax if non-U.S.but international) This amount is reported at year end through the Fund/ETF, and reflected on the tax slip I receive from my brokerage. When I fill out my return, I can then apply for a foreign tax credit which means I should get back all the tax that was withheld.
2) The portion of dividends from the Canadian companies held by the Fund/ETF will be eligible for the Dividend Tax Credit but NOT the portion from the U.S. or international companies.

Thank you for your help !

Read Answer Asked by Alexandra on January 25, 2017
Q: I buy a number of my international stocks on the OTC Market, since my brokerage account does not let me directly transact on exchanges outside of North America. The American Depository Receipts (ADR) for a particular company ("xxxx") have the ticker format xxxxY, whereas the "fungible" shares (i.e. for which there is somewhere, at least in principle, an actual stock certificate issued by the company) have the ticker format xxxxF.

Assuming that there is at least some liquidity for the shares of a particular company, it is almost always the ADRs (xxxxY) that have the most trading volume. However, sometimes the fungible shares (xxxxF) are slightly more liquid than the ADRs.

In terms of risk (e.g. in the event of another major financial crisis) are the ADRs more risky, i.e. do they depend on the solvency of the custodial bank in New York (e.g. BNY)? On the other hand, who actually possesses the fungible shares (xxxxF)? Is it this same custodial bank? Is there a real stock certificate somewhere?

Thanks!
Read Answer Asked by Gregory on January 25, 2017
Q: The answer to a t1135 question by Sylvia 2 days ago wasn't correct:

T1135 - This form has nothing to do with the USA or USA estate taxes. It is a form required by the Canadian government. The purpose of the form is to make taxpayers more forthcoming about assets they have outside Canada. The problem is that the people that file the forms are the same ones that would report their foreign income anyways and the ones that have hidden foreign assets will just ignore the T1135 requirement. The penalty for not filing / late-filing is $25/day to a maximum of $2,500. Registered assets don't have to be reported on the T1135.



Read Answer Asked by Christopher on January 25, 2017
Q: I would appreciate your insight on when to exit from growth and longer term portfolios. In winning positions one has luxury to take profit according to personal inclination. Some take at 15%, some 20% to 25%.

My special concern are loosing positions. I have heard of 13 week moving average, Chandelier stop (3ATR). They make sense in a trading situations. What will your advise be to get out from 5i type Growth and Long term portfolios when the stock has tanked. Could that a specific % loss say 8% to 10%. I am interested in your criteria.

Thanking you
Shah Husain
Read Answer Asked by Shah on January 24, 2017
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