US Withholding Tax on Dividends by Account Type (TFSA, RRSP, Non-Registered)
This is the account matrix under the how to invest in Canada hub. The S&P 500 version of the same rule is VFV versus VOO. Where to place the sleeve is the asset-location guide. The paperwork that turns 30% into 15% is Form W-8BEN at your broker, described in the IRS instructions.
- Article X(2)(b): 15% of the gross dividend in cases other than a company that owns at least 10% of the voting stock. That 5% corporate rate is not a personal TFSA rate.
- Article XXI(2): dividends and interest derived by a resident arrangement that is generally exempt and operated exclusively to administer or provide pension, retirement, or employee benefits are exempt in the other country.
- Brokers apply that pension exemption to RRSPs, RRIFs, and similar locked-in retirement accounts when the US security is held directly. Confirm the account is coded that way.
- TFSA, FHSA, RESP, and RDSP are not named in that paragraph. Do not assume the exemption. In a TFSA the 15% is not creditable.
- A Canadian ETF that owns a US-listed ETF takes the withholding inside the US fund. Your RRSP cannot unwind it.
Which account keeps the dividend?
| Account | US stock or US-listed ETF you hold directly | Canadian ETF that owns a US-listed ETF (VFV is the worked example) | Can you claim it on a T1? |
|---|---|---|---|
| TFSA | 15% with a valid treaty claim. Up to 30% without one. | Withholding inside the US fund, before the Canadian fund distributes. Not recoverable. | No. TFSA income is not reported, so there is no foreign tax credit. |
| RRSP, RRIF, and similar retirement accounts | Exempt when Article XXI applies and the plan is the beneficial owner. | The exemption does not reach through VOO or a similar US ETF. VFV's page says that is what it holds. | Not on the way in. The withdrawal is taxable later as ordinary income. The RRSP playbook is that bill. |
| FHSA, RESP, RDSP | Do not assume Article XXI. The paragraph is about pension and employee-benefit arrangements. These accounts are not those products. | Same wrapper problem, and usually no Canadian tax against which to credit the withholding. | Generally no credit for tax on income Canada is not taxing inside the account. Confirm the slip. |
| Non-registered | 15% with W-8BEN, otherwise up to 30%. Report the gross dividend. | The fund may report foreign income and foreign tax on a T3. Withholding taken inside a US ETF is not always passed through in full. | Yes, within limits. Form T2209, line 40500. A provincial credit is separate. Quebec is not the federal form. |
Table as of September 2026. It describes the treaty and CRA's foreign-tax-credit page. It is not a ruling on your account. US citizens and green-card holders have a different problem: the IRS may not treat a TFSA the way Canada does. This page is about Canadian residents who are not US persons. If you are a US person, stop and get cross-border advice before you open a TFSA.
What does 15% mean in dollars?
Fifteen percent of $1,000 is $150. Thirty percent is $300. The $150 difference is the W-8BEN. In a non-registered account you report the gross $1,000, not the $850 that hit the account. CRA's line 40500 instructions say you may claim a foreign tax credit for foreign income tax on income you reported. The credit is limited. If Canadian tax on that income is only $80, you do not get a $150 refund. The unused slice is not a gift. In a low-income year, or when the dividend tax math is already low, the credit can fail to cover the withholding. The character of foreign dividends, with no gross-up, is dividends versus growth.
You hold VOO directly in the RRSP. Article XXI applies. Withholding on that dividend is $0. You hold VFV, which owns VOO. The US fund pays the withholding before your RRSP sees the cash. Switching the ticker without changing the account does not create the exemption. On VFV's published 0.84% yield, $100,000 throws off about $840, and 15% of that is about $126 a year left inside the wrapper. Holding VOO directly is how that $126 stays in the RRSP. You still need USD to buy it. The conversion cost is Norbert's gambit. A 1.5% conversion on $100,000 is $1,500, which is many years of $126. Do the gambit, or use a broker whose spot ticket is cheap, or accept the wrapper.
What about interest and capital gains?
The damage people feel is the dividend. Article XI of the same convention deals with interest, and the treaty rate on ordinary interest is not the dividend rate. Most gains from selling a US stock are not FDAP dividends. The IRS instructions for Form W-8BEN say FDAP does not include most gains from the sale of property. A US stock that pays no dividend does not create this withholding bill when you sell it. A US stock bought for the yield does. Do not let a blog treat "US stocks" as one tax object.
Level I of the decision is still the account, which is best ETFs for a TFSA if the shelter is the TFSA, and tax-efficient investing if the account is taxable. A Canadian ticker does not collect a treaty benefit the RRSP could have collected itself. That sentence is also the point of the hedging guide.
Frequently asked questions
Is US withholding in a TFSA always 15%?
It is 15% when the treaty rate applies. Article X(2)(b) is 15% for portfolio dividends. The IRS says the statutory rate is 30% if the withholding agent does not have a valid W-8BEN. File the form your broker asks for, and renew it when it expires. The 15% that is correctly withheld is still not recoverable inside a TFSA.
Does an RRSP always get 0%?
Article XXI(2) exempts dividends derived by a qualifying pension arrangement. RRSPs are treated that way when the plan holds the US security and the broker applies the exemption. A Canadian ETF in the middle breaks the chain. A missing form can leave you at 30% until it is fixed. Check a recent dividend, not the marketing page, if the amount looks like 15% or 30% inside an RRSP that should be exempt.
Can I claim a foreign tax credit on TFSA withholding?
No. CRA's foreign-tax-credit page is for foreign tax on income you earned outside Canada and reported on your return. TFSA investment income is not reported. There is nothing to attach the credit to. That is why asset location puts high US dividends in the RRSP and not in the TFSA.
What about the FHSA?
The FHSA is not described in Article XXI(2). Do not import the RRSP exemption because both accounts feel "registered." US dividends inside an FHSA should be treated as exposed to withholding, and the FHSA's Canadian tax-free treatment means you should not count on a credit. If the horizon is a house, you may not want a volatile US fund there at all. The timeline is the FHSA guide.
Do I get a full credit in a taxable account?
You get a credit up to the Canadian tax on that foreign income, computed on Form T2209, not a refund of whatever the US withheld. Report the gross income. Keep the T3 or T5. If the fund did not pass the foreign tax through, there may be nothing on the slip to claim. Provincial credits are a second form. Quebec residents follow Revenu Québec's version, not the other provinces' Form 428 line.
Does this apply to Canadian companies listed in New York?
A dividend from a Canadian company is a Canadian dividend, even if you bought the New York listing. The US withholding in this article is about US-source dividends. Journaling an interlisted Canadian stock, which is a currency operation, does not create US dividend tax. The journal is Norbert's gambit.
Sources
- Finance Canada: Canada-US tax convention (Articles X and XXI)
- IRS instructions for Form W-8BEN
- CRA: line 40500 federal foreign tax credit
- Vanguard VFV, including the foreign-tax column on distributions
Fifteen percent of a dividend is a location problem.
The bracket on the RRSP withdrawal is a larger one. The 2026 tax guide is that calculation.
Get the 2026 Tax Guide — $49 CAD
