• Hello, Pat, enjoying my new subscription to Dividend Advisor. My question is: I understand that the Foreign Withholding Tax on U.S. corps. is not offset by the Cdn. Income Tax Credit allowance if that stock is held in a TFSA. Would that suggest that U.S. stocks should not be considered in a TFSA? Thank you for your reasoned response. B Nelson

    • Canadian shareholders do pay a 15% withholding tax on dividends from U.S. stocks. In most cases, however, if you hold the stocks outside your RRSP, you can get a Canadian income tax credit to offset that tax.

      If you hold the stocks in an RRSP, the withholding tax doesn’t apply. However, as you mentioned, if you hold U.S. stocks in a TFSA, you can’t get back the withholding tax. So investors should consider holding dividend-paying U.S. stocks outside of a TFSA.

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