StealthP3D
Well-Known Member
I would agree with you if we were talking about the US & the IRS.
but what I’m referring to is Canadian TFSA accounts that are non-taxable accounta because the money you put in them has already been taxed. Growth inside them is generally capital gains and income tax free in most cases.
the wrinkle is when something is called a “dividend” and how US withholding taxes of 15% could be applied on monies held in a TFSA. ( Canadian Tax Free Savings Account )
admittedly I am not an expert in this area, but it has me wondering
What's the penalty for holding dividend stocks in a TFSA?
“
If your blue chip stocks are U.S. dividend payers, there’s another tax issue to understand: the U.S. imposes a 15% withholding tax on dividends paid to Canadians. However, if you hold your U.S. stocks in an RRSP, this withholding tax does not apply. And if you hold them in a non-registered account, you can recover it by claiming the foreign tax credit on your return. Unfortunately, you can’t avoid the withholding tax in a TFSA.
With that in mind, it might be better to hold U.S. blue chips inside your RRSP rather than your TFSA. But again, you need to consider the big picture. If your registered accounts are not maxed out, it is certainly better to hold U.S. dividend payers in a TFSA than in a non-registered account. Yes, you will lose the withholding tax, but the remaining dividends and all of the capital gains will be tax-free forever.
—Dan Bortolotti, CFP, CIM, associate portfolio manager with PWL Capital in Toronto. “
Use common sense. It's the VALUE of the dividend that gets taxed. A stock split dividend is a zero worth dividend.
I have no knowledge of tax laws in other countries but it would asinine to tax you on the four shares you get when the very valuable share that enabled those 4 shares just lost 4/5ths of it's value. That's just common sense.
People are making this out to be more than it is. Don't get me wrong, it's a great catalyst for a bull run but that's all it is. I'll take it.