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
15 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
Jr. Member
Jul 25, 2008
183 posts
95 upvotes
ottawa
yeah, but you might want to drip them if you want to stay fully invested.
[OP]
Newbie
Aug 18, 2003
15 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
Jr. Member
Apr 19, 2017
187 posts
117 upvotes
Yes for Canadian ones.
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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
1889 posts
183 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
536 posts
157 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 Addict
User avatar
Dec 14, 2010
4955 posts
4559 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
User avatar
Jan 28, 2007
1131 posts
709 upvotes
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.
Jr. Member
Apr 19, 2017
187 posts
117 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.
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Sr. Member
User avatar
Jan 21, 2017
619 posts
139 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"?
Newbie
Aug 17, 2016
96 posts
5 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
619 posts
139 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
1595 posts
467 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.
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Member
May 5, 2016
319 posts
310 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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