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U.S. withholding tax in an RRSP for Canadians
– moneysense.ca
AskMoneySenseI have EPD stock in my RRSP for their dividend payments (about 7%). What a surprise I had—even when in an RRSP—I had to pay about 30% tax on these dividends. EPD is registered in Louisiana.
—Wanda
How much is withholding tax on U.S. dividends?
I am going to provide a brief summary of U.S. withholding tax on investments, Wanda, before addressing Enterprise Products Partners (EPD) specifically.
First, U.S. stocks are generally subject to 30% withholding tax on dividends for non-residents. It does not matter where the firm is located that offers and holds the brokerage account. Foreign withholding tax is determined based on residency of the payor and the recipient.
Many countries, including Canada, have tax treaties with the U.S. to ensure a reduced rate of withholding tax. For qualifying Canadian residents, the tax can be reduced to 15%. In a registered retirement savings plan (RRSP), the tax may be reduced to 0%.
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Inflation a scourge for retirees? Ottawa’s silver lining(s)
– moneysense.ca
While inflation and taxes are both major scourges for retirees, there’s a silver lining in how the two interact. That’s because the federal government builds in a degree of inflation-indexing to tax brackets, retirement vehicle contribution room and major retirement programs like the Canada Pension Plan (CPP), Old Age Security (OAS) and the Guaranteed Income Supplement (GIS).
As CIBC Private Wealth’s Jamie Golombek recently wrote for the Financial Post, come 2024, all five federal income tax brackets are indexed to inflation using the rate of 4.7%. The new brackets are 15% for income between $0 to $55,867; 20.5% between $55,867 and $111,733; 26% between $111,733 and $173,205; 29% between $173,205 and $246,752, and 33% beyond that. Most provincial income tax brackets are also indexed to inflation.
The basic personal amount (BPA) for 2024 is $15,705. That means most people will pay no tax on the first $15,705 of income.
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