Human error at TDDI cost me several hundred dollars -- any recourse?

gendrol75 wrote: ↑ The first CS rep I spoke with at TD (back in May) told me I needed to send in an updated form W8-BEN to fix this situation. I did so electronically and this rep confirmed their systems were now up to date. The problem was not actually fixed, however. There were withholding taxes applied to the next two dividend payments -- I waited two cycles just to be sure.

gendrol75 wrote: ↑ TLDR: A CS rep at TDDI screwed up, and as a result I have paid $$hundreds in unnecessary taxes. Is there a way to get it back?

Hi,

Just a quick question for anyone who may have been through a similar situation.

I have a self-directed RSP account with TD Direct Investing. In my USD account there I own some shares of Vanguard's VTI ETF. Around May of this year, I noticed that withholding taxes were now being deducted from US dividends paid into this account. This is not supposed to happen in an RSP.

The first CS rep I spoke with at TD (back in May) told me I needed to send in an updated form W8-BEN to fix this situation. I did so electronically and this rep confirmed their systems were now up to date. The problem was not actually fixed, however. There were withholding taxes applied to the next two dividend payments -- I waited two cycles just to be sure.

After phoning in again, a different CS rep this time told me that their systems actually hadn't been correctly updated back in May. Apparently there is a hard-to-spot checkbox somewhere in the TD backoffice software that actually disables the withholding tax; in my case this checkbox had not been checked even after the W8-BEN was received.

This human error entirely the fault of TD CS reps has cost me several hundred dollars in pointless withholding taxes in my USD RRSP account. I asked for compensation but the rep claimed there is no direct compensation in cases like this. Her advice was to talk to a tax expert and get the money refunded somehow at tax time. I'm not tax resident in Canada at the moment, and given that RRSP accounts are never supposed to be taxed (or even mentioned in my tax return, aside from withdrawals?) this advice seems totally weird and impractical.

Is there anything I can do, or should I just assume this money is gone forever?


Thanks!

ruchir wrote: ↑ I am sorry OP! Don’t know what to say other than that I have a strong dislike for big 5. Each one has screwed me in different ways over the years. I don’t have a suggestion for you. I buy their shares but no longer have any products with them.

I bank with Simplii and for investments I have QT, VB and IB. You get the hint!! Switch now and your will recover your loss and more in no time.

Screw the banks!!!

ownthesky wrote: ↑ Simplii is CIBC though... even if you go to their mutual fund page, it’s just CIBC’s ridiculously priced funds with some Simplii lipstick on lol

ownthesky wrote: ↑ Simplii is CIBC though... even if you go to their mutual fund page, it’s just CIBC’s ridiculously priced funds with some Simplii lipstick on lol

ruchir wrote: ↑ I agree 100%........but when I said Simplii, I simply meant their chequing account and not mutual funds.

I don’t do mutual funds....but for those that do mutual funds (which I strongly discourage), I suggest QT, VB, and IB but never CIBC.

xgbsSS wrote: ↑ CIBC Investor's Edge is quite price competitive I have to say.

JUnit wrote: ↑ OP mentioned that he/she is not a tax resident in Canada. I'm no expert on such matters, but could that have an effect on how US dividends are treated in an RSP account? i.e. depending on tax treaties between Canada, the US, and whatever country in which OP is tax resident, the withholding tax may not be waived.

gendrol75 wrote: ↑ I wondered about this too, but the withholding taxes only began suddenly in October 2018. I've been non-resident since 2013.

What's more, the CS rep I spoke to claimed that submitting my W8-BEN and updating their backoffice software appropriately should stop the withholding taxes going forward. According to others above, W8-BEN should not be required for RSP accounts at all. In the mean time I'm out almost $500.

gendrol75 wrote: ↑ I've spoken to a supervisor at TDDI.

For anyone who's interested, their explanation for the withholding taxes is now that the IRS has something called a "5-year rule". When you leave Canadian tax residency, the IRS will refrain from charging withholding taxes on the dividends (from US shares) in your RRSP for 5 years. After this period it's 30%, or 15% if an up-to-date W8-BEN has been submitted -- presumably the same as in a non-registered account.

This explanation does fit the facts of my case, but I've never heard of any such 5-year rule. I'll keep googling and searching irs.gov, but can anyone point me in the direction of further info?

ksgill wrote: ↑ I believe you have been provided an explanation of what's going on here. What do you want to achieve by googling and searching for more information on this? Perhaps you should speak with an accountant who specializes in this field?