US withholdings in an RRSP account at Direct Investing

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barrister
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US withholdings in an RRSP account at Direct Investing

Post by barrister » 22 Sep 2017 18:10

I hold a few US holdings on the US side of my RRSP at Direct Investing. I had recently purchased a small amount of Teva Parmaceutical and was surprised to find that 15% of the recent dividend was withheld. I called Direct Investing and the agent went and looked into this and came back an told me that the withholding was done by the agent transferring the dividend to Direct Investing and that apparently there is nothing Direct Investing can do about it. It's really a small amount of money involved but it surely is annoying especially when you are told that there is nothing to be done about it. Any comments or simlar experiences with this stock or any others at Direct Investing or any other firms? Many thanks.

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kcowan
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Re: US withholdings in an RRSP account at Direct Investing

Post by kcowan » 23 Sep 2017 00:09

There is always withholdings on ADRs so I never hold in my RRSP. But US stocks have zero holdback.
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barrister
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Re: US withholdings in an RRSP account at Direct Investing

Post by barrister » 23 Sep 2017 02:34

So this is an ADR. How do you identify stocks which are ADRs?

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kcowan
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Re: US withholdings in an RRSP account at Direct Investing

Post by kcowan » 23 Sep 2017 05:20

Their HQ is not in the US and they do not have a listing directly in the US. So the ADR is subject to withholding in the home country. Telcel in Mexico is one example.

Here is a list you can check for any prospective purchases:
http://topforeignstocks.com/foreign-adrs-list/
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Re: US withholdings in an RRSP account at Direct Investing

Post by pmj » 23 Sep 2017 11:09

kcowan wrote:
23 Sep 2017 00:09
There is always withholdings on ADRs so I never hold in my RRSP. But US stocks have zero holdback.
Withholdings on an ADR depends what country it's based in. EG no withholding on UK ADRs. A lot more than 15% at some countries. This is separate to the fee levied somewhere along the transfer process when the dividend is paid.
Peter

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barrister
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Re: US withholdings in an RRSP account at Direct Investing

Post by barrister » 23 Sep 2017 13:03

Thank you for your information. As they say, live and learn.

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AltaRed
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Re: US withholdings in an RRSP account at Direct Investing

Post by AltaRed » 23 Sep 2017 13:27

barrister wrote:
23 Sep 2017 13:03
Thank you for your information. As they say, live and learn.
Mutual funds and ETFs that invest in securities other than Canada and USA will have withholding taxes that in some cases are non-recoverable. It is a fact of life.

Sometimes that is still worth it since there is no eligible dividend tax credit anyway. As an example, does a 15% non-recoverable withholding tax on a 2% yield (30 cents on a $100 asset) really mean anything? When does it really hurt? A 30% non-recoverable withholding on a 4% yield ($1.20 on a $100 asset)? Maybe. Better idea might be to pick 'foreign' stocks that do not pay a dividend.
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