Investing

Newb here. TFSA with dividend stocks - can i just leave them in TFSA?

  • Last Updated:
  • Feb 12th, 2019 11:07 am
[OP]
Newbie
Aug 18, 2003
17 posts
3 upvotes
Vancouver BC

Newb here. TFSA with dividend stocks - can i just leave them in TFSA?

Hi!

Newb here. About TFSA with dividend stocks - can i just leave the dividend payments in TFSA allowing the TFSA to grow above and beyond?
16 replies
Member
Jul 25, 2008
387 posts
266 upvotes
ottawa
yeah, but you might want to drip them if you want to stay fully invested.
[OP]
Newbie
Aug 18, 2003
17 posts
3 upvotes
Vancouver BC
danishh wrote:
Feb 8th, 2019 7:52 pm
yeah, but you might want to drip them if you want to stay fully invested.
thanks....I'll look into that
Penalty Box
Apr 19, 2017
828 posts
637 upvotes
Yes for Canadian ones.
CucuCovers, GreatCanadianRebates, LendingLoop, Mintos, PayMi, Stack, Tangerine, TransferWise, Uber, Wealthsimple
Sr. Member
Mar 3, 2007
556 posts
43 upvotes
Vancouver, BC
sandeep8g wrote:
Feb 8th, 2019 8:08 pm
Yes for Canadian ones.
Or US ones... however they would be subject to the 15% withholding tax that cannot be recovered.
Deal Addict
Jan 3, 2013
1999 posts
268 upvotes
Sidney
Charles wrote:
Feb 8th, 2019 7:48 pm
Hi!

Newb here. About TFSA with dividend stocks - can i just leave the dividend payments in TFSA allowing the TFSA to grow above and beyond?
Yes, of course. That is how you compound your dividends to grow and grow and grow tax free. But most definitely, as they grow, re-invest them into the same stocks/ETF's that is giving you those divvies. Only then will it truly compound.
Sr. Member
Jul 8, 2008
673 posts
218 upvotes
Toronto
thematrix49 wrote:
Feb 8th, 2019 11:21 pm
Or US ones... however they would be subject to the 15% withholding tax that cannot be recovered.
Newb here as well. Can you please explain more? Why the 15% tax? And is that on the dividend portion or everything?

Does this apply to RRSPs as well?
Deal Fanatic
User avatar
Dec 14, 2010
5447 posts
5567 upvotes
sidde0 wrote:
Feb 9th, 2019 5:15 am
Newb here as well. Can you please explain more? Why the 15% tax? And is that on the dividend portion or everything?

Does this apply to RRSPs as well?
The tax treaty between Canada and US requires 15% tax withholding on dividends and 10% tax withholding on interest. So if you own a U.S. stock, as a Canadian resident, there will be 15% withholding tax on any dividends earned. If you own a U.S. bond, as a Canadian resident, there will be 10% withholding tax on any interest earned.

The 15% treaty rate only applies to dividends paid from U.S. corporations. Capital gains on the sale of investments other than real property are not taxed when the recipient is a non-resident, non-citizen of the U.S. - as long as that person has not been in the U.S. for 183 days or more during the tax year.

The only registered account exempt of withhold taxes are RRSP.


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Deal Addict
Jan 28, 2007
2123 posts
1442 upvotes
SW Ontario
Yes, exactly what has all been said above.
I synthetically Drip all my holdings in all my accounts, except for the basic cash account.
I only hold my US stocks either unregistered (held they a transfer agent) or in my RRSP, and not my TFSA account.
Also, make sure if you buy a US stock with cdn funds, you instruct the institution to hold any dividend or sales proceeds in USD otherwise they will convert it back to CDN so your not dealing with loss due to exchange rates.
I'd rather be outdoors camping, kayaking, and mountain biking ...
Penalty Box
Apr 19, 2017
828 posts
637 upvotes
thematrix49 wrote:
Feb 8th, 2019 11:21 pm
Or US ones... however they would be subject to the 15% withholding tax that cannot be recovered.
Correct.
I did not want to confuse the self admitted Newb.
CucuCovers, GreatCanadianRebates, LendingLoop, Mintos, PayMi, Stack, Tangerine, TransferWise, Uber, Wealthsimple
Sr. Member
User avatar
Jan 21, 2017
696 posts
189 upvotes
danishh wrote:
Feb 8th, 2019 7:52 pm
yeah, but you might want to drip them if you want to stay fully invested.
How do I initiated that using TD direct trading account ?? Would it just automatically become "drip"?
Jr. Member
Aug 17, 2016
124 posts
8 upvotes
DPR2017 wrote:
Feb 10th, 2019 12:39 pm
How do I initiated that using TD direct trading account ?? Would it just automatically become "drip"?
In TD, it is not automatically. You need to call them for this.
Sr. Member
User avatar
Jan 21, 2017
696 posts
189 upvotes
duwangren wrote:
Feb 10th, 2019 1:10 pm
In TD, it is not automatically. You need to call them for this.
ok great - thanks. will ask. would enabling DRIP also helps with withholding tax?
Deal Addict
Feb 9, 2013
1742 posts
545 upvotes
Mississauga
DPR2017 wrote:
Feb 11th, 2019 1:04 am
ok great - thanks. will ask. would enabling DRIP also helps with withholding tax?
No, withholding tax is applied either way on US stocks that pay dividends/interests.
Member
May 5, 2016
334 posts
320 upvotes
DPR2017 wrote:
Feb 10th, 2019 12:39 pm
How do I initiated that using TD direct trading account ?? Would it just automatically become "drip"?
If the stock or fund has a DRIP program then yeah call TD and ask them to sign you up for it. Keep in mind some DRIP programs don't allow partial share purchases, meaning if the dividend amount is not enough to actually purchase a whole share.

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