Q: Further to a question about directing USD dividends (paid by Canadian companies) to a USD bank account: I think the question is both more complicated and more simple than 5i's answer suggests.
As is generally understood, a number of Canadian companies - for example, CSU, NSU, and OTEX - can by bought/sold in either CAD or USD, but pay dividends in USD. At the same time, many Canadians have occasion to make purchases in USD. This leads to three questions:
1) is it better to buy/sell in CAD, or in USD?
2) how do you accept USD dividends without paying currency conversion costs?
3) how do you move USD from a brokerage account to a banking account without paying currency conversion costs?
As concerns (1): supposing that the stock were equally liquid on Canadian and American exchanges, the question comes down to tax-preparation preferences. If you buy/sell in CAD, then you don't have to do currency conversions when determining the adjusted cost base.
As concerns (2): any competent brokerage will have some way of accepting USD-denominated dividends without currency conversion. For example, at TD, if you held CSU/NSU/OTEX/etc in a USD-denominated account, then dividends would be accepted in USD. To move a position from a CAD account to a USD account, you ask the broker to 'journal' the position from one account to the other. Journalling incurs no currency conversion fees, but you will have to remember to ask the broker to do the journalling for you, each time you make a purchase (or sale.) And, of course, you will still have to currency-convert the amount of each dividend for tax-preparation purposes.
Note that some brokerages - for example, Interactive - do not segregate CAD- and USD-denominated stocks in separate accounts.
As concerns (3): some banks - for example, TD - provide for USD-denominated accounts/cards. Once you've set this up, you should be able to move funds from a (TD) USD brokerage account to a USD bank account or credit card in much the same way as you would CAD-denominated funds. Of course, the bank will charge you a fee (or require a minimum balance) for this.
Clearly, there are certain dependencies, here, on the services of particular banks/brokerages. In general, however, it should be possible to do as the member asked: direct USD dividends to a USD bank account without (double) currency conversion.
As is generally understood, a number of Canadian companies - for example, CSU, NSU, and OTEX - can by bought/sold in either CAD or USD, but pay dividends in USD. At the same time, many Canadians have occasion to make purchases in USD. This leads to three questions:
1) is it better to buy/sell in CAD, or in USD?
2) how do you accept USD dividends without paying currency conversion costs?
3) how do you move USD from a brokerage account to a banking account without paying currency conversion costs?
As concerns (1): supposing that the stock were equally liquid on Canadian and American exchanges, the question comes down to tax-preparation preferences. If you buy/sell in CAD, then you don't have to do currency conversions when determining the adjusted cost base.
As concerns (2): any competent brokerage will have some way of accepting USD-denominated dividends without currency conversion. For example, at TD, if you held CSU/NSU/OTEX/etc in a USD-denominated account, then dividends would be accepted in USD. To move a position from a CAD account to a USD account, you ask the broker to 'journal' the position from one account to the other. Journalling incurs no currency conversion fees, but you will have to remember to ask the broker to do the journalling for you, each time you make a purchase (or sale.) And, of course, you will still have to currency-convert the amount of each dividend for tax-preparation purposes.
Note that some brokerages - for example, Interactive - do not segregate CAD- and USD-denominated stocks in separate accounts.
As concerns (3): some banks - for example, TD - provide for USD-denominated accounts/cards. Once you've set this up, you should be able to move funds from a (TD) USD brokerage account to a USD bank account or credit card in much the same way as you would CAD-denominated funds. Of course, the bank will charge you a fee (or require a minimum balance) for this.
Clearly, there are certain dependencies, here, on the services of particular banks/brokerages. In general, however, it should be possible to do as the member asked: direct USD dividends to a USD bank account without (double) currency conversion.
