I have just opened a US brokerage account — what now?
Three things, in this order. Check what you signed when the account was opened: the declaration of foreign status is what sets the rate deducted from every payment, and it is far easier to fix at the outset than to unwind later. Then work out whether this account, added to anything else you hold outside Canada, brings you into foreign-property reporting, a test that turns on cost rather than on how well the shares have done. Then ask the question nobody asks at opening. US shares are US-situs property for estate purposes whoever owns them, so the account carries an exposure decided by where the assets are.
Should I sort out the withholding or the reporting first?
The withholding, because it is the only one of the two that is still changing. Every dividend paid while the wrong declaration sits with your broker is deducted at the wrong rate, and each payment is a little harder to correct than the one before it. Reporting is retrospective: the schedule filed with your Canadian return covers a year that has already closed, and it can be prepared properly once the documents are gathered. So the first call is to the broker, the second is to your own records, and the estate question comes third — not urgent in the same way, but no better for waiting.
How do I check what rate my broker is withholding on dividends?
Take one dividend and divide the amount deducted by the gross amount paid, using the confirmation or the monthly statement rather than the annual summary. The annual figures blend payments taxed on different bases and will not tell you what you want to know. Then compare that against what the declaration on file entitles you to. If the two do not agree, the usual explanation is a declaration that has expired, or details on it that no longer match the account. Ask the broker to confirm in writing what status they hold for you, and keep the reply with your records.
Should I move my US shares to a Canadian broker instead?
It may be worth doing for other reasons, but it does not answer the question most people are asking when they raise it. The estate exposure attached to US shares follows the situs of the asset, not the address of the account or the country of the custodian, so the same shares in a Canadian account remain US-situs property. Moving the account can simplify your paperwork and your withholding documentation. What changes the estate position is a change in what you hold or how it is held, and that is a decision to take with the whole picture in front of you.
My statements are all in US dollars — where do I start?
With the transaction records rather than the annual summary. Canadian reporting is in Canadian dollars, and income is converted using the rate that applies when it arises, so a single year-end conversion of an annual total will not survive examination on the disposals. Start by exporting the year's transactions, mark up which lines are dividends, which are interest and which are sales, and note the date on each. That list is the input to everything else: the income on your return, the credit for the tax withheld, and the cost figures the foreign-property schedule needs.
Does any of this need doing before the year ends?
Two parts of it do. A declaration of foreign status that has lapsed should be replaced before the next dividend is paid, because each payment made under the wrong status becomes a separate correction. And if you are thinking of changing what the account holds, the date of the trade decides which year it falls in, on both returns. The rest — the reporting schedules, the credit computation, the estate question — is done from records once the year has closed. If you are unsure which part of your own situation is time-sensitive, ring +1 (416) 619-0068 before you trade.
Do Canada and the United States share tax information?
Yes, through more than one channel. The treaty has an exchange-of-information article that supports both routine and on-request exchange. Separately, an intergovernmental agreement has Canadian financial institutions identify US-reportable accounts and report them to the CRA, which passes them to the IRS, with the reverse flow for Canadian residents. Most other country pairs use the Common Reporting Standard for the same purpose. See FATCA reporting.
Is moving money between my own accounts in two countries taxable?
Moving your own capital between your own accounts is not itself income, so the transfer is not what creates tax. What can create tax or reporting is the income the money earned before it moved, a foreign-exchange gain on certain holdings, and the reporting obligations the balances themselves trigger — foreign account and asset reports keyed to balances rather than income. Remittances out of some countries also need certification before the bank will send them. See foreign account reporting.
