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how wasteful is it by investing in foreign dividend-paying stocks in a TFSA?

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  • how wasteful is it by investing in foreign dividend-paying stocks in a TFSA?


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Answer #1 | 29/11 2013 15:32
You'd be better off keeping these investments in a TFSA. It is true that you would be able to claim a foreign tax credit on your return. However, you would also have to report the dividend on your return in Canadian dollars. The tax rate payable on the dividend would certainly be higher than the amount claimable as the foreign tax credit. US vs Non-US foreign stock dividends are treated the same when reported on your tax return. The only difference country-to-country would be how much tax is payable to the foreign country. The tax rates are defined by treaties that are in place between Canada and the other countries. Non of the treaties that I've come across would make foreign dividends non-taxable in Canada.

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