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Q: In February MoneySense published an article that discusses taxation for dividend generated by U.S. stocks held by a Canadian resident. In that article states: “The treaty requires 15% tax withholding on dividends and 10% tax withholding on interest. So if you own a U.S. stock, as a Canadian resident, there will be 15% withholding tax on any dividends earned. If you own a U.S. bond, as a Canadian resident, there will be 10% withholding tax on any interest earned.”
In line with that, I have a few questions for you regarding holding U.S. stocks directly through a self-managed TFSA. Does the 15% withholding tax also apply to capital gains? That is, selling a U.S. stock at a higher price that what you paid for it initially? Secondly, for the withholding charges, is the investor the one reporting to the IRS or would that be done directly by the investment management company? And finally, when is the tax withheld: when the stock is sold or at the end of the fiscal year?
—Ezequiel
A: In regards to your first question Ezequiel, the 15% treaty rate only applies to dividends paid from U…

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Stella & Mat
Stiver-Balla
AGE: 28 and 32
PLACE: Toronto
TFSA TOTAL: $77,210
STRATEGY: Growth and blue-chip stocks

Me and my TFSA
Four years ago was an important time for Mat Stiver-Balla. In 2013 he married his wife Stella, 28, and he began investing in his TFSA.
Like most young investors, Stiver-Balla started his TFSA without really knowing much about investing. The money sat in cash in his account for the first two years until his day, a mortgage broker, started giving him a few pointers on what to do with the account. That was the push Stiver-Bella need to start following the stock markets in newspapers and magazines. “I started teaching myself how to read balance sheets and I started picking stocks based on what numbers I thought looked good,” says Stiver-Balla. It was enough to make him more comfortable with stocks and investing.
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He credits MoneySense with his ability to read a balance sheet—especially when it came to understanding key stock metrics and ratios like price-to-earning and price-to-book ratios…