I made this reply to a poster on another board and have excluded his post due to Y space limits, but believe its clear enough to easily follow the thoughts I presented.
Not sure how you have come to your conclusions since:
01) By Tax Treaty, no tax should be with held on a Canadian distribution when held in an IRA (I currently or have held ACNJF, AVNNF, APFRF, BTE.UN, CSS.UN, EVDVF, PMGYF, PVX, Ultima, VKERF and probably some others I have forgotten in IRA without a single penny with held)
02) Your broker must submit correct registration data to enable this tax treaty provision
03) Scottrade customers have historically reported mishandling of Canroys held in IRAs
04) A very few Canadian Stocks are not DTC eligble and MIGHT present a with holding problem
05) In a taxable account, any Canadian with holding on a distribution ROC component is deemed an improper foreign tax by the IRS and is not legally claimable on form 1116. The IRS position is that it must be recovered from the Canadian Gov
06) The Canadian requirement to attempt to recover improperly with held tax on ROC is costly and may be greater that any possible recovery. The expense of certifying EVERY distribution EVERY month from EVERY trust is significant and have heard some brokers won't even do it for the $25-30 per entry.
07) I have not read of a single successful recovery from the Canadian Gov but have read of several folks who are now in year 3 after making the submission
08) I choose to hold an investment making 18% in my IRA because IMHO its pretty stupid to only make 4, 5, 6% when I can make 18% but then again thats just me
09) By holding a Canroy in my IRA, I receive 15% larger distribution (see item 01) than if I held the same in a taxable account
10) I choose to hold Canroys in my margin account as well as my IRA again because 18% is better to me than something yielding 6% or less
11) IMHO, 3 of the possible determinations for choosing to place a Canroy in a margin account vs an IRA would be:
a) High ROC component (and this is arguable)
b) if its a partnership and you want to be sure to stay clear of the $1000 UBTI max and the associated US TAX ON IRA MONIES (this is a case where an IRA CAN pay taxes)
c) its a dual listed Canroy (ERF, PGH, PTF, PVX, PWI and couple others) and therefore qualifies as marginable since the OOTC tickers are not marginable for most houses
In closing it should be noted that through June 2004 Acclaim/ACNJF had the correct (zero) with holding in taxable accounts. However after their July 2004 purchase when they went to less than 100% ROC, they now have with holding on the full distribution including the ROC fraction.
ERF has always had the correct with holding (none on the ROC fraction) because they declare their ROC on a monthly basis rather than year end.
It is this year end (usually in march april time frame) ROC declaration that causes the improper with holding since the with holding agency sees ONLY a monthly dividend and NO ROC declared.
These are the facts as I have experienced them, your mileage may vary
thanks for info.....can see that you have refined and become more specific in your understandings...of what is going on in the CRT sector....your self assured expression inspires a comfortable feeling....
hopefully all of us remember you are giving your best opinion at any given time based on facts and experience as you understand them....and that this is an ever evolving process as more experiences & changes occur as interpretations & rulings continue....
appreciate your continued input on CRT's & your ever increasing knowledge base on.......
waterhouse, my broker, is a canadian owned company...might be interesting to see if they could help a customer in any way with problem you mentioned.......am sure would take some pushing and escalation beyond the border, but would be doing such if i were involved....
while on subject of waterhouse...a touch of history......
H20 went public several yrs back, was listed as TWE at the time...after a very few years, they went private again....the parent co repurchased all of the IPO shares at about half of the price originally sold for...is then that i decided the canadians are learning to be more american all the time........
any of co's you follow that made any or closed any property aquisitions at what may have been over inflated prices when oil was recently peaking.....i know if i were selling a property based on price of oil, would have been pushing like mad to close the deal........
have been looking at PWI recently as someone mentioned it here....any words on this ?
should a guy have a question, do you have a normal haunt where you can be found?
A cross section of posters thoughts on the best 3 Canadian trusts going forward ... not to be confused with ONLY O&G trusts ... although most are O&G, with a couple drillers and a sprinkling of business trusts. If you need assistance in determining who they are add a .UN and look up here:
For instance AE is AE.UN (Acclaim Energy Trust)
Poster First Second Third
0123456 PEY PTF AY
4sure1 AE AVN VKR
ARTY BNP AE SHN
bakerboy AE AVN SIN
BCBrian3 GCI AE BTE
beehopper TDG IPL PES
butterfly13 TDG TIL DHF
bryand REI EIT AY
bychoice BNP CXT EIT
canmex H TE PMT AVN
chico99 TDG AVN PES NAL
clambakes NVG PMT AY
class act COS PEY AVN
davey7680 AE AVN NAE
dlloyd AE NAE VKR
earthacq H TE TDG AFN
eastearner AE TDG PEY EIT
etsio OGF SDT EIT
flattrack EEE BTE PTF
franko13 EWI EIT SDT
fritzie NAE AE AET
Gambleman01 TDG PEY CNQ
gerryhar PEY BNP FET
GreenBastard H TE EEE PGF
greenred TDG PMT EIT
hstrybuf TDG DAY BNP
investr22 PEY H TE AE
jerryv H TE PMT TDG
jss PMT H TE AE AVN
kevinkt PEY H TE PBB SCU
largeinvest PEY TDG COS
Lem2 BNP H TE AVN
marlyn999 PEY TDG SIF
marshall12 TDG AET BNP
marte EIT AE AET
mooser BNP H TE AE PMT
MyerK SIF TDG BFC REI IPL PIF
nadreck PEY BR TDG WMB SRF
nobudy SIF RVD EEE MOG
othelo AE TDG PES EEE NVG
PolarLight AE NAE PGB TDG
raylewis BAD TDG BR
robinbrook TDG PEY H TE
rocki AET AE NAE
roots9 AY VKR AE
rotair69 BTE TDG AE
rsky PEY TDG REI
samiamdj PEY ZAR H TE
sarnakc H TE AE DAY EEE
seriousinvest OST TDG H TE
sgilmo COS PEY VET
sportstermathew PEY TDG CXO
tele8 BNP ERF AY
tomtom EIT AE VKR
tv52489 PEY TDG H TE
wildcherry VKR TDG SCU
williamviril AEU COS OST
wynner PMT NVG AVN AY VKR
zilem PMT BR NAL
Speaking only of taxable accounts:
I moved out of a PWI holding early 2004 in the 12+ range to buy a second helping of Acclaim - ACNJF, still hold all the Acclaim (roughly 35% of my taxable account) and now have bought back into PWI on latest dip at almost twice what sold earlier (but am still very very happy with the spring swap).
So I have held it and do again ... but IMHO, ALL the dual listed stocks are very poor substitutes for the TSX only/OOTC symbols. I accelerated my PWI purchase from first of year 2005 into 2004 due to the dip. Its an already planned and I believe twice mentioned partial swap from ERF.
I will foolishly probably continue to hold remaining ERF as "free" shares but foolish because of ERFs low yield (but its still nice to figuratively have a Cadillac). ERF is by far the oldest O&G trust, also the biggest and has second longest RLI beating most of others by a wide margin ... 13+ years last I looked.
I hold both of these dual listed stocks ONLY because I can margin them and have been trying desparately to increase marginable holdings to 50% of my margin account ... however its really difficult to turn loose higher paying better performing NONMARGINABLE Canroys to accomplish this end. At a pps of 16.50 and ~19% divie ERF is a good buy ... at 33-35 and 10.7%ish divie diff story.
As to PWI, IMO, its just best dual listed value of a poorer performing Canroy segment (Americans willing to pay more for less and have bid them up too high).
So I have completed all 2005 PLANNED buys and first of year will bring margin back down with planned sells of part of ERF holding and all EVDVF.
Since appears EVDVF are not gonna do required bookkeeping/filings to allow US ROC and perhaps not even declare it as qualified ... so does not belong in taxable account but still great diversifiers for IRAs.
NOTE that it seems some of the more lenient ... lax ?? brokers allowed last year but Ameritrade goes with what the company publishes/posts (although I did have tax dept check with company) and this is my first and last tax year holding in the taxable account ... will continue to hold EVDVF in IRAs as I have for several years.
My thoughts and what I have done but definately not magic and I am no relation to Midas ... so walk at your own pace
PS I read many boards thoughout the day, including this one. As said before, I just don't post often even when I might take issue with certain posted opinions. A message to me here will be read