Investment Taxes for Canadians Pt2: Interest, Eligible Dividends, Capital Gains & Return Of Capital
ฝัง
- เผยแพร่เมื่อ 26 ก.ค. 2024
- Investment income is taxed more efficiently than salary income
00:00 Intro
01:20 Income Sources
05:30 Interest/Dividends
08:18 Capital Gains
09:38 Return of Capital (ROC)
14:08 How are Funds Taxed?
16:27 Examples + 15% Tax
24:03 Closing Thought's
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#taxes #RoC #dividends #capitalgains #taximplications #passiveincome #investing
Finally Video that I've been waiting for!! Awesome info!
Getting over $800/month with you dividend strategy now!! ECSTATIC!! Thank you!!
sweet sid B! How much do you have invested so far?
@@WillBhart invested all my money (~80K)basically in split shares and income funds. I'll use this tax info to better distribute my portfolio and purchase ETFs.
@@sidb9540 nice :) so its almost a perfect 100k to 1k a month \ 12k a year
Wonderful! I am brand new to this so I am still trying to figure things out.
I am planning to invest in
ZWC EIT DFN TNT
As passive income
And
VfV and QQQ
For growth...
Still trying to play around with % in distribution.
I wonder if it is right move.
Great video. Thanks for the information and clarity in presentation. You mention the 15% foreign withholding tax, and I offer two considerations (as I understand things (I’m not a tax or investment pro) to potentially add even more clarity.
1. The withholding tax is withheld by the foreign government- it is not a Canadian tax ( I see confusion on this point in various videos). Canada does apply a withholding tax to foreign investors returns but that applies to money leaving the country.
2. The withholding tax rate varies by country. While US holdings are likely most common for Canadian investors, other countries apply withholding tax at different rates.
3. the Canadian foreign tax credit only applies to one level, meaning for example, if you invest in a US fund that holds Australian stocks, the AU govt will apply its withholding tax to returns paid to the US fund, the the US govt will then apply its 15% to payments made to Canadian investors. In effect the return will have two levels of withholding tax applied by the time it lands in the hands on the Canadian investor but CRA only permits FTC for one level as far as I know.. It’s a bit or roadmap to follow, but the key take away is research and know where the investment dollars are ultimately landing to avoid surprises.
Food for thought. Hope it’s useful.
You sound like a tax pro , good stuff !!
2 years later and this is still the best video on TH-cam explainaing how income made from funds are taxed in Canada. Thank you Adrian!
Would love to see a video with the best ETFs to hold in a regular account to avoid maximum tax!
Thanks for the simplification! Well explained!
You really opened my eyes to the different ways we gain or lose our profits. I would like to speak to you regarding setting up my portfolio with the mentioned strategies to the end of your informative episode. I will pass this video on to my family and friends. Thank you
Thanks for the feedback!! I offer a 1 on 1 consultation service on my website ! Check it out !
Amazing, well explained, thank you
Adrian thank you so much for the part where you showed how to find the tax information! I really appreciated this help.
Well done, very informative. There is a lot of unnecessary criticism regarding Return of Capital in particular. The BMO Tax FAQs document is also quite informative.
Ty!! Explaining it very well
Good job! you have great content.
Thank you 🙇
Very helpful info. Thanks a lot.
Thank you for another great video.
Love this info for Canadians!
Very helpful! Thanks
Good video, thanks for this info Adrian!!!
Good summary, thanks.
I hit the like before I watch. That’s how good this channel is
Same here
i do the same plus i also usually watch their videos multiple times, so much good info
Me also. I even watch the commercials in the hope that Adrian gets something from TH-cam.
Very informative. Thank you.
Great information man! Keep it up! Liked this vid!
Excellent video Adrian lots of good info that I learnt from it!!
Thank You for you Video. Very helpful.
Thank you for another great video!!
Very educational. Thank you
Great video. Very informative.
Very helpful, thank you.
Great content!
Amazing information - thank you!
very helpful, thanks so much
Thank you so much. Love your video and follow with good results. Thank you
Very helpful
Thank you 🙏🏻🙏🏻🙏🏻
Great job
In Ontario, eligible dividends are better sheltered from taxes than capital gains because of fed/prov. Tax credits. If your only source of income is dividends ~50k or under you'll pay zero to a few hundred dollars in tax.
Great to know ! I saw that article too 😎
I knew about that and my goal is to live of dividends! Hopefully, by the age of 55.
Great video!!
Great stuff! Thanks for putting this together... one of the few videos that I paid full attention to all the way through! Well done!
Nice information right there!
Just reached can$2,800/month dividend income. Thanks for the high quality content. Please keep them coming!
Wow great job keep going !! On your way to freedom
You da man Adrian! You legit answered all my questions in the video. Thank you so much!
Happy to help! , make sure to check out all my TAX videos. They are in a specific Playlist
fantastic video . thanks so much . thats why i hardly paid any tax for 2020
very useful information
Great Information!!
informative!!
I have reviewed at least a dozen of the Tax & Distributions for BMO ETFs and none had any Non-Eligible Dividends entries except for ZRE which had a small entry! This may be why the CGs and ROC are used, which is a good thing!
Notice that the ZWG Eligible Dividends 0.08215 counters the ZWG Foreign Tax Paid 0.083640. The Eligible Dividends are probably because of 2 Canadian Banks and Enbridge earnings in ZWG.
Thanks, good video.
Thumbs up, thanks so much
Amazing video Adrian - I have a way better understanding on investment taxes and another compelling reason adopt your recommended passive income strategy! Many thanks 🙏🏾
😉
thanks adrian !
Love your videos Adrian, thank you for everything you're doing!
When it comes to your portfolio and taxes, do you focus on having certain stocks/ETF's in your cash account and others in your TFSA? Based on what you showed, it would seem like a good strategy to hold certain shares that you'd normally have to pay a lot more in taxes on within your TFSA.
I try to keep high yielding ones in my tfsa so my contribution room grows faster and compounds over time
Best advise ever. Unfortunately i cant subscribe twice 😅
Hey Adrian! Hope all is well. Looking forward to your stock picks for May!!
Liked!
As usual excellent content 🙏👍. If we follow your videos we no need to check any other TH-cam. You have provided A-Z information. From the starch to start and with Tax information too. I really love it. And happy to see 1M subscribe soon. I am forwarded to all of my friends. Handoffs to you👍
Thanks ! Much appreciated . But I always suggest to do as much research as possible !!!
Thanks!
Thanks! Much Appreciated
@@PassiveIncomeInvesting 👍 I will donate more as time goes on and I get to watch more of your presentations. I am new to your channel. Guided here from Brandon Investing and Parallel Wealth youtube channels on Canadian Investing and financial planning. 🍁👍🇨🇦
Great ! Glad I can help . Take care and stay passive 😉
Loved this vid. My first time seeing you. You explain everything in easy to understand terms. Thanks. You have a new follower. Lisa
Awesome! Thank you!
Adrian. Could you please do some reviews on specific income funds like EIT.UN compare to split share or reits? Thnx!!
Excellent and clear explanation of taxes on various investment types. Great job! 👍
Thanks bud for making this video, very helpful and will keep this one saved. so I know you said other income is taxed like non eligible dividend, can you confirm in which categories does it fall under in that TD handout you shared? Love the channel
It would fall in the first category (the worst one )
@@PassiveIncomeInvesting got it ... 50 in 50 out not so nice :) thank you for confirming
Great video. Thanks!
Time to replace the Webcam with a real camera + mic
Can you please make an updated video on this topic? Thank you so much for all you have done for us investors.
th-cam.com/video/fMzf4G4WV5Q/w-d-xo.html
Very well explained I thought. We appreciate it. Can anyone recommend any books about educating yourself on the ins and outs of margin accounts in Canada? I have not yet ventured outside my registered accounts but am considering doing so.
Adrian.. could you include the tax information for each recommended stock in your Ultimate Dividend Passive Investing Package that you will be releasing soon .. you could accomplish this by adding 4 new small columns and fill in approx % of income... it certainly would make it easier to pick a stock to add to our portfolios knowing the tax structure .. just a suggestion.. great video
I can’t , it wouldn’t make sense because the info changes with every dividend
Good video as usual! I have watched your other video in which you talked about selling your condo and renting a place. I was wondering what your rent is? Most people get out of renting and buy their own condo or a house but you did the opposite.
Yes ! my rent is free 😀
Adrian, Thanks for the awesome video. One question: For a particular security, is it the expectation that the components of distribution (interest, dividends, capital gains and ROC) remain stable over time? This is in general, a security that mostly paid ROC last year will continue paying ROC and not switch to interest for example.
It can vary every year , but usually it’s close if the fund keeps the same strategy . They want to make it as tax efficient as possible for us
I like to think of ROC as delayed capital gains. Eventually when you sell your position you'll have to pay. The only true tax free income I know of is muni bonds.
or if you never sell, cant pay taxes when you re dead!
Hi Adrian,
How are dividends taxed for non residents on a cash account?
For a retired dividend investor looking for passive income it would be better to hold US dividends in your TFSA to avoid the interest tax rate and just pay the 15% withholding tax.
Great video as always. Do you know if TD WebBroker would automatically adjust the ACB every time a ROC is received? Thank you and keep up the good work.
Great question ! The answer is no unfortunately
Yet again - a great video!
What would be a good portfolio for a RESP for my kid? I downloaded the excel sheet from your website (different types of portfolios) but wasn't too sure which one is best for RESP?
Any thoughts?
Thanks! Keep up the good work.
In my opinion, several good choices, but for an RESP - where I assume the expectation is that you will withdraw all of the money to fund an education (or educations), you might want to consider the options where there is some growth over time, or not as much depreciation in capital. For instance from 2011 to 2021 $10,000 invested in EIT.UN (Canoe) would have grown to $21,913 (assuming DRIP), but the share price went from $15.21 to $11.55 over that same time period - so best to look at longer term total returns. You're not looking for income with your RESP your're looking to have a total return to pay for education. It's good to remember that all stocks and mutual funds look really good on the 12 month charts right now so take a look at the longer term returns.
In Lithuania, capital gain tax is 15%. It is payable when your income is above 3000 euros and -500 euros from a lump sum as non taxable amount. Capital gains are better when paid in low amounts as they are effectively non-taxable, but as most foreign dividends are taxed at 15% rate, it is better just to get dividends when sums are considerable. However, when you do not receive massive amounts of money, that 3500 non taxable ceiling is massive.
I will have to consider capital gain dividend payers as there is potentially huge tax harvesting opportunity with them. However, by taxing my capital gains tax on capital gains, I won't have a freedom to sell my holdings tax free most of the time.
Good afternoon,
BMO and Canoe do a great Job of displaying how there distribution is broken down into the 5 categories. Im having trouble finding the distribution breakdown for BGI.un, any help would be appreciated.
Thanks in advance
Go on their site , then “fund literature” and open the first document . Looks like it’s primarily roc income
I can't like more then once... my god this was helpful
This was very educational and answered many questions including some I hadn't even thought to ask yet. But I am still struggling with whether it is better to hold US Dividend stocks or funds in a TFSA or RIF. It seems to me that the 15% withholding is less than the tax payable on the RIF withdrawal when you take the money out, plus there is no tax on capital gains in the TFSA ever. What am I missing?
I would put them in the rif
is this video only applicable to mutual fund investments and not stock market investments?
Hi i would like to know which canadien etf that will grow like the s&p 500 without the 15% exchange rate? thanks bro
Hello Adrian
can you please do a video telling different btw DFN & DS. one is a split and the other is select. what does that mean? and manangement fees on both . Thanks
Already did a while ago ... search my channel for it . “Hesitant to invest in dfn “...
Thank you so much Adrian. Question though:
If I keep reinvesting into the ROC-type ETF’s, can I effectively, in a sense, keep ‘delaying’ my 0-ACB and ACB is only applied to my shares that were invested within it’s 10-year ‘limit’? So capital gains will only be applied to the 10-year limit shares and the others are still ROC?
yup! it would take a very long time to get to zero ACB either way!
Adrian I am trying to figure out how KLIP would be taxed in a normal account. If you have any insight I would love to hear it. Love your videos...I am watching lots of them at the moment.
Adrian, thanks for going through this. If I invest these dividend funds with my TFSA account, do I still need to worry about the tax? If it's RRSP account, do I pay these tax only if I make a withdrawl? Can you explain the tax implications with these two account types?
I covered that in part one 😎 check out the other video
Great video, Adrian. However, is there any effect of the Federal Dividend Tax Credit on Canadian dividend-bearing stocks on your breakdown?
The tax credit is why eligible dividends are taxed better than interest . You can see that in the graph I showed
Could you do a video for foreign taxes, the ideal place to hold them and how much it may impact the dividends you receive?
I covered that in the video ...
Hi Adrian! Thanks for another informative video! I decided start with investing into 100 ZWC ($17.70/share) and 100 EIT ($11.50/share). I wanted to also put 100 shares of DFN at 7.99 per share but their price went up so I couldn't buy.
You have mentioned that you have lost some share in FTN/ FNN due to Consolidation of share. When does "Consolidation" happen? And will any of the 3 stocks (ZWC, EIT, DFN) exposed to near future Consolidation?
Thank you again for very informative video!
Good job , consolidations are rare I only ever saw it with ftn . I wouldn’t worry about it happening on cc ETF’s
@@PassiveIncomeInvesting thank you thank you! 😊 I am only Starting very small.
wish we get those DFN times back soon...
The TD chart was easy to remember and understand. Thanks! I'm planning to buy CLM in my TFSA (still have a lot of room). So if I bought CLM at 17% yield my actual yield will be 2% because of 15% withholding tax?
No, Adrian can confirm, but if you looked at the dividend for May 28th (ex-div on May 13th) it's $0.16 per share. With the 15% withholding tax you would actually receive $0.136 per share. That works roughly to a yield of 13.92% (instead of 16%). Or you can think of it like this yield of 15% * 0.85 = yield of 13.6%
(should be yield of 16% * 0.85 = yield of 13.6%)
You’re right On the money ! That’s correct !
@@James_48 hi James, do you know how much tax would be for DFN? If it is in regular non-registered account?
Is QYLD ok for my rsp?
work hard and save! (best for gov. & banks) work smart and invest (best for you!)
nice quote!
Very informative video by you sir, You explained it better than an accountant. Sir, can you please tell us which city you live in Canada? Thanks again.
Thanks ! Ok I’m in Mtl !
Hey Adrian when you have this much invested in a variety of fund types, is it still simple to do your own taxes or is it better left to an accountant?
It’s simple , you get a t3 statement for each fund . But it’s just a bit longer if you have a lot of funds
TFSA video want to see
Thanks for all the information!! How do the taxes work when the DRIP is on in a cash account?
Drip makes no difference on taxes ! You gotta pay them … drip or no drip
Thanks, this was a great informative video !!
Question for you........ if I have an opportunity for an IPO and they offer Class A and Preferred shares at equal numbers, is that a good option ? I am looking at the new Brompton fund
For the new infrastructure split fund ? There is always an equal amount of class a and preferred shares for splits that’s how they work , the class a ones are the attractive shares for yield
@@PassiveIncomeInvesting Thanks for your reply. Yes, that is the fund available on IPO right now. When purchasing IPO's, is that risky ??? (I have never done that before)
Not sure what you mean , risky ipos are more for single, speculation stocks not funds like this one . I’m just waiting until it comes out
@@PassiveIncomeInvesting Thanks for replying !! I like following your channel and advice. Cheers
Hi Adrian, I didn't understand about taxation for DFN? Is it roughly 15% tax on its dividends?
I explained the tax classifications in the video . To know the breakdown of an individual fund , like dfn , you need to go look on their website . Like I showed in the video
Hi Adrian, if DGS is bought and sold within a year and it paid ROC distributions, do we have to manually adjust the ACB and therefore pay tax on the increased capital gains? In that sense, ROC is not tax-free, right? I am confused, please advise. Thank you.
Yes it lowers acb , I use td and it automatically adjusts your acb so you don’t need to manually keep track ( bless technology) but you only pay capital gains when you sell the shares, so keep them forever and you’ll never have an issue
@@PassiveIncomeInvesting Thanks for your reply. What about DGS or ZWU or ZWC, do we have to manually adjust the ACB or is it done automatically for us? Please advise. Yes, if we don't have to keep track manually, it makes things so much easier. Thank you.
Adrian we are confused US Funds in a CDN cash account - ROC income from various funds is added up and is recorded by Investorline as a consolidated T5 and classified as Foreign income -=
100% Taxable at marginal tax rate. Please explain.
Impossible , t5 is only for eligible dividends . Even US roc should be roc roc
Kind of an on and off topic... what happens to your shares in a split fund if it does close. How is it treated for tax purposes in a cash account. I'm invested in DGS.TO if it helps for the example.
Whatever the nav of the funds ends at , is what you get back . If you get more than your original investment back , the difference would be a capital gain
@@PassiveIncomeInvesting Your videos are helping with the dividend portion of my investments. Thank You!
Hello, just wondering if you have a list of ROC paying dividends that I may access. If not can you make a video on 5 - 10 ROC paying companies. I only know of 2 - DGS.TO and TNT.UN. Thanks in advance
No I don’t , it’s not something that’s consistent. They could have roc one year and no roc the following year .
@@PassiveIncomeInvesting ok thanks.
Can you please made video on how you imvest this with webbroker td with all the fee and suchsuch or you do with wealthsimple ..please i am new to this ans i see you does this broker ,just wonder how fee work on all stock you buy amd sell of such .thank you .
When is may picks coming out?
Lol tomorrow 😀
Always good info. thank you. Would be better if shorter videos, say 15 min.
It’s harder than you think 😉
Do they only send a T3 for taxable holdings? I only have things in a RRSP and don't recall receiving any.
yes