A reader wants to know: Will my capital gains be taxed?
Q – Is it safe to hold U.S. stocks in a TFSA? Will capital gains be subject to U.S. withholding tax? I understand that registered accounts are non-taxable for capital gains on U.S. assets. – Dale W.
A – There seems to be a lot of confusion about U.S. stocks in a TFSA so let me try to clear this up. Only U.S. dividends are subject to withholding tax in these accounts. Capital gains are treated the same way as gains on Canadian stocks – they are tax-free.
U.S. dividends received in an RRSP or RRIF are not subject to withholding tax because those plans are designated as retirement accounts under the Canada-U.S. Tax Treaty. – G.P.