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Does anyone target non-Canadian investments here?
January 12, 2023
9:37 pm
butterflycharm
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Has anyone looked up or does foreign investments of any kind? guaranteed or not...real estate...etc? in G7 or other countries?

Any tax or rates advantages?

January 13, 2023
5:33 am
savemoresaveoften
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Guaranteed ? If I tell u there is one, you are going to believe it ?

Madoff was a sure win up until…

I will give you credit for asking all ‘kinds’ of questions lately all of a sudden. Retire recently or just bored all of a sudden ?

January 13, 2023
3:09 pm
AltaRed
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Canadians are taxed on worldwide income based on Canadian income tax rates.

January 13, 2023
5:15 pm
butterflycharm
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AltaRed said
Canadians are taxed on worldwide income based on Canadian income tax rates.  

Do foreign ones charge tax automatically at interest issue or at withdrawals?
Or they get issued and then rebated once Canadian tax is filed?
For example Certificate of Deposit in USA or other GIC type products in Europe? (though Europe interest rates might be very low compared to USA/Canada).

January 13, 2023
5:22 pm
Doug
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AltaRed said
Canadians are taxed on worldwide income based on Canadian income tax rates.  

That's a bit misleading, given the U.S. taxes U.S. citizens, including dual citizens, on worldwide income. Canada does not do that. It would be better phrased as: "Canadian residents for income tax purposes are taxed on worldwide income based on Canadian income tax."

Cheers,
Doug

January 13, 2023
6:16 pm
Norman1
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There's no US taxes on interest from a US bank or US credit union received by a non-resident, non-US citizen.

Consequently, there's no source withholding on such interest.

Canadian government does not refund any foreign taxes withheld. Generally, taxes withheld is credited against the Canadian taxes on the income. If what is withheld is more than the Canadian taxes, then that is unfortunate.

Effectively, one ends up paying Canadian taxes or the foreign taxes, whichever is higher.

January 13, 2023
6:58 pm
AltaRed
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I agree with the qualifications/clarifications of the above posts but the answer i provided is the same. There is no tax benefit advantage to taxable Canadian residents holding foreign investments.

There can be tax disadvantages to holding foreign assets but that is a different question.

January 13, 2023
8:28 pm
mordko
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Not sure exactly what you mean but… Quite a few people hold foreign investments, myself included. There are potential tax advantages if you hold them within a registered account, eg an RRSP wrapper. Some can be guaranteed by a foreign government, eg treasuries or TIPs.

There are also additional risks and taxes resulting from holding foreign securities, such as withholding taxes or foreign estate taxes.

January 14, 2023
10:07 am
Dean
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.
And then of course, there's also ETFs that focus on foreign stocks, etc.

I'm invested in four, in my TDDI accounts.

    Dean

sf-cool " Live Long, Healthy ... And Prosper! " sf-cool

January 14, 2023
4:36 pm
butterflycharm
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Norman1 said
There's no US taxes on interest from a US bank or US credit union received by a non-resident, non-US citizen.

Consequently, there's no source withholding on such interest.

Canadian government does not refund any foreign taxes withheld. Generally, taxes withheld is credited against the Canadian taxes on the income. If what is withheld is more than the Canadian taxes, then that is unfortunate.

Effectively, one ends up paying Canadian taxes or the foreign taxes, whichever is higher.  

So interest earned from a Certificate of Deposit from USA or Term Deposit Accounts from UK (Canadian GIC equivalents):
1- Will not have any taxes or other fees withheld at maturity.

2- Do get reported directly to CRA like GICs and HISA account do with T5.

3- A Canadian resident is to disclose that income to CRA for getting taxed on it.

4- Tax on these interest are same amount as there is from a Canadian GIC.

5- If there is a tax withheld or applied (for other foreign products) from a foreign
country, it will not be reimbursed by CRA but can be deducted from tax duties that have to be paid to CRA so that it is not double taxed.

6- In essence if investing in a country other than Canada or in Canada, the interest or capital gains will hit the pocket with same amount of taxes so there is no tax savings advantage of investing overseas.

Is all above correct?

January 14, 2023
6:10 pm
AltaRed
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I am only aware of US domiciled investments.

1. Correct
2. Yes if held in a Canadian domiciled investment account.
3-6 Correct.

I have invested in foreign securities for over 40 years. One does it for diversification reasons, potential for higher performance returns and to avoid double jeopardy (an imploding Canadian investment climate and crashing of the loonie). I want a good portion of my investment portfolio backed by the US greenback and not Canuck currency.

January 14, 2023
7:20 pm
BlueSky
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For question 1 above: this is true only if that country has a tax treaty with Canada. Furthermore, you have to fill out, if I am not mistaken, an IRS 1042 form (for the U.S.). This form is a declaration that will see you pay your tax on investment to Canada.

January 14, 2023
9:24 pm
butterflycharm
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AltaRed said
I am only aware of US domiciled investments.

1. Correct
2. Yes if held in a Canadian domiciled investment account.
3-6 Correct.

I have invested in foreign securities for over 40 years. One does it for diversification reasons, potential for higher performance returns and to avoid double jeopardy (an imploding Canadian investment climate and crashing of the loonie). I want a good portion of my investment portfolio backed by the US greenback and not Canuck currency.  

Thanks.

A- Assuming you have had Certificate of Deposits invested as well (or with your USA investments) do they never report directly to CRA and provide you with receipt to report yourself? What about IRS form 1042 that BlueSky mentioned?

B- I am assuming that if any investment product has tax withholding for the citizens of a country that will also apply to any foreigners too. Is this the rule of thumb?

January 14, 2023
10:43 pm
Norman1
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butterflycharm said

So interest earned from a Certificate of Deposit from USA or Term Deposit Accounts from UK (Canadian GIC equivalents):
1- Will not have any taxes or other fees withheld at maturity.

2- Do get reported directly to CRA like GICs and HISA account do with T5.

What I said only applies to US interest from those sources and only to non-resident, non-US citizens.

Every country has its own tax laws. US tax law does not apply in the UK. As well, if the Canadian taxpayer has US citizenship, the taxpayer will pay US taxes regardless if the taxpayer is a US resident or not.

No, US payers don't report to CRA. CRA does not have jurisdiction in the US. The US payer won't be filing a T5 information return with the CRA or issuing any T5 slips.

The US payer of interest will report to IRS as they usually do and will send the foreign recipient the usual IRS form, like Form 1099-INT, to report the interest. It will be up to the Canadian interest recipient to figure how to deal with that with CRA, including converting the US$ amount on the form to Canadian dollars.

January 15, 2023
5:53 am
AltaRed
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My response was limited to US domiciled investments held in a Canadian brokerage account. The brokerage issues the appropriate T5 tax slip with US sourced income.

If one holds the investment directly, such as bank savings accounts and CDs from a US bank like Wells Fargo, WF will issue a 1099 to you and you have the obligation to report that income to CRA on your tax return on a CAD equivalent basis.

I have never held US domiciled investments like REITs and MLPs and cannot comment on the associated tax forms produced by them.

January 15, 2023
8:25 am
Norman1
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The US company will send a Form 1042-S to foreign investors to indicate the amount received and the US tax withheld.

January 15, 2023
8:40 am
hwyc
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@butterflycharm I can't help but noticed you've started topics in different directions in a relatively short period of time, none of them converging. And IMO these topics are not meant for beginners. People are trying to be helpful. But without knowing the person's background, a powerful tool may do one harm more than good. My two cents.

January 15, 2023
8:48 am
TommyT
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AltaRed said
My response was limited to US domiciled investments held in a Canadian brokerage account. The brokerage issues the appropriate T5 tax slip with US sourced income.

If one holds the investment directly, such as bank savings accounts and CDs from a US bank like Wells Fargo, WF will issue a 1099 to you and you have the obligation to report that income to CRA on your tax return on a CAD equivalent basis.

I have never held US domiciled investments like REITs and MLPs and cannot comment on the associated tax forms produced by them.  

Get out of the U.S. dollar or hedge it before it takes a massive plunge. Shorting the U.S. dollar is a surer thing than getting a return on a GIC. You may not make a lot of money but the surest investment where you can't possibly lose is shorting the U.S. dollar at the very start of this year.

January 15, 2023
11:24 am
justsmileandnod
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TommyT said

Get out of the U.S. dollar or hedge it before it takes a massive plunge. Shorting the U.S. dollar is a surer thing than getting a return on a GIC. You may not make a lot of money but the surest investment where you can't possibly lose is shorting the U.S. dollar at the very start of this year.  

Just like the big market crash on Jan 5?

January 15, 2023
9:43 pm
mordko
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TommyT said

Get out of the U.S. dollar or hedge it before it takes a massive plunge. Shorting the U.S. dollar is a surer thing than getting a return on a GIC. You may not make a lot of money but the surest investment where you can't possibly lose is shorting the U.S. dollar at the very start of this year.  

Are these posts meant as a parody? Not particularly helpful.

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