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PowerShares DWA Technology Momentum ETF Message Board

  • onthebucks onthebucks Oct 14, 2005 12:03 AM Flag


    Greetings, Pal. Over the past year, I've discussed the matter of non-Canadian taxation of Canroy distributions with IR personnel at 4 different Canroys. Each of the individuals I spoke with told me that their companies were actively lobbying to have such taxation eliminated, especially when the distributions were being made to retirement accounts. Pure and simple, the Canroys want and need both Canadian and non-Canadian unit holders. So, all the talk that is currently going on in Canada may ultimately benefit American investors. Just imagine what will happen to the price of the Canroys on the US stock exchanges if the current 15% tax is eliminated. The stock prices will go through the roof. As far as media analysts are concerned, I wouldn't put them in the same category as the guys who wrote the gospels. Media analysts can influence many investors but no one can tell if what they write or say is pure analysis or quasi-analysis meant to enforce some hidden agenda. All that having been said, I think the Canroys are going to be around for a long time and continue to gain popularity as valuable investment vehicles. Of all the Canroys, I think that PTF is going to be around the longest. Stay well.

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    • penchina,

      We'll find ut. I actually reported $600 as a foreign tax credit on the 1040. Essentially this is like donating the extra $19 to the Canadian tax authority. In doing so, I saved
      myself over $350.


    • If you under report because you do not understand the complex code, you will only be hit with interest and a nice penalty; if you do it with intent to defraud, it is a criminal act. LOL

    • If you under report because you do not understand the complex code, you will only be hit with interest and a nice penalty; if you do it with intent to defraud, it is a criminal act. LOL

    • Try simply declaring only $599 of foreign taxes. I think there it is no crime to under-report deductions or credits.

    • Newbie
      It's THEIR country to do with as THEY please. I share your frustation,but no one is twisting your arm to invest in THEIR country.
      Simply invest elsewhere, if you can do better.

    • Completely agree with logan. I have PTF and ERF in both regular and retirement accounts. Even with the Canadian tax, tell me what would have been a better investment in the last year?

    • Snelling,

      It's not necessarily a bad thing to have a Canroy in your traditional IRA. How useful it is depends on your particular circumstances. It makes a difference if your a large player, or a small player; whether your working or retired; whether your drawing down your IRA, or paying into it; and whether it's a Roth or a traditional IRA.

      Although you will have Canadian tax deducted from your distribution before you get it, it's still a great dividend payout. I'm a rather small player, retired, but not yet drawing from it. I use the dividends from the Canroys in my traditional IRA as a substitute for the payments I made when I was working. That way, I can continue to purchase additional securities, and increase my holdings.

      I have some Canroys and other foreign ADS's in my taxable account also. The limit you can claim on your US FED Form 1040, against foreign taxes is $600 for a joint account. Over $600 you have to fill out a form 1116.

      Last year I had $619 witheld in foreign taxes. If I had only $600, I would have had the whole amount as a credit against my US tax liability. Instead I had to fill out the form 1116, and was only allowed a $254 dollar deduction.

      That's a loss of $346 dollars, unless you can come up with a creative solution. Not many creative solutions are looked upon favorably by the IRS.

      Good luck on which ever way you decide to go.


    • I don't think it really matters what your basis is in an IRA. Everything that comes out of a traditional IRA is taxed at your marginal rate and everything that comes out of a ROTH is free.

    • relax ... i'm sure many others on this board share my frustration of a country willing to tax dividends which end up in a non-taxable account in a country THEY HAVE A TAX TREATY WITH. Canada does not share the same laissez faire doctrine that we in the US do and this has a direct impact on the value of all Canroys incl. PTF.

    • newbie
      Can we keep this board apolitical? Please!
      your investment comments are appreciated.

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