Investing

Capital gains on US ETF's tax treatment

  • Last Updated:
  • May 6th, 2020 9:31 am
[OP]
Newbie
May 23, 2017
7 posts

Capital gains on US ETF's tax treatment

Say that I (Canadian citizen/resident) buy an American equity ETF on a US exchange and then sell it a year later to make $10,000 in capital gains.

Ignoring any dividends that ETF may have paid, and just focusing on capital gains how much tax would I have to pay to the IRS and Canada revenue? This would be in a non registered account Could you please provide references too.

I can't seem to find anything about this. Everything that I come across is about foreign withholding taxes (FWT), but FWT seems to only apply to income )interest and dividends), and not capital gains.

How much do Canadian shave to pay on capital gains on US equity etf's to the IRS and CRA? What if the etf is in a TFSA?


What are the references for this?

Thanks.
Last edited by dentalfloss on May 6th, 2020 3:10 am, edited 2 times in total.
2 replies
Sr. Member
Jan 6, 2015
985 posts
296 upvotes
from what I understand, may be not correct.
In TFSA, you pay nothing on capital gain. In RRSP, you pay tax when withdraw. In unregistered account, if you have $10000 CAD gain, $5000 as taxable, $10000 USD gains needs to exchange to CAD first, 50% taxable, lots of calculation, sorry.
As Canadian citizen and resident, I do not think you really pay the IRS.
Foreign withholding taxes does not apply to RRSP, I get 15% tax on each dividend of US company in my TFSA.
Jr. Member
Jun 17, 2018
118 posts
92 upvotes
Hamilton, Bermuda
Canadians don't pay capital gains tax to the IRS. IRS only gets their cut via FWT as you mentioned, as well as estate taxes.
Reference about estate taxes: https://ca.rbcwealthmanagement.com/docu ... a219cbeb57

As for CRA, no tax on capital gains within TFSA. Half of the capital gains in a non-registered account are added to your taxable income for the year. This is then taxed at your marginal tax rate for the year, which depends on how much you earned in the year... That marginal tax rate can be anywhere between 0% and 53.53% in Ontario.
Tax rate tables: https://www.taxtips.ca/taxrates/on.htm

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