Issue #001: The Tax Traps Nobody Warns You About

Hey, it’s Andrew.

This week I noticed an influx of Reddit threads asking the exact same question: “Why did I get taxed on my AAPL dividends if they’re in my TFSA?”

There’s a lot of investing content out there. Almost none of it was written with Canada in mind. So let me solve this specific TFSA mystery for you right now so you don’t lose 15% of your yield.

The TFSA Withholding Tax Trap

The TFSA is great for growth. It has one specific problem with US dividends. The IRS does not recognize the TFSA as a retirement account the way it recognizes the RRSP.

Because of this, the US imposes a 15% withholding tax on any dividends paid by US corporations to a TFSA. That money is scraped off the top before it ever hits your account, and there is no way to claim it back.

If you are buying VFV or Apple for growth? Fine. The dividend is tiny anyway. But if you are building a US dividend portfolio in a TFSA, you are effectively setting 15% of your yield on fire.

The Fix: Hold US dividend payers directly in your RRSP.