US Dividends: Which Account Should You Hold Them In?

US withholding tax, the W-8BEN, and how the RRSP and TFSA differ

Scott Tang, CPAUpdated 2026-11-052026 rules4 min read

When US shares or US-listed ETFs pay dividends, the US first withholds some tax. How much is withheld, and whether you can get credit for it, depends on which account the investment is held in. The same stock held in an RRSP usually has nothing withheld; held in a TFSA, the tax withheld is simply lost.

15%

With a W-8BEN on file, US dividends usually have 15% withheld

US dividends on shares held directly in an RRSP or RRIF usually have nothing withheld

Not recoverable

The 15% withheld in a TFSA, RESP or FHSA can't be credited in Canada

Can be credited

Tax withheld in a regular (non-registered) account can be claimed as a foreign tax credit

Four types of account in one table

Account	US withholding US-listed shares and ETFs	Credit in Canada? Foreign tax credit	Looking only at US dividend withholding
RRSP, RRIF (including spousal RRSPs)	✓Usually 0% (treaty exemption for retirement accounts)	—Not applicable	—Least withholding
Regular account (non-registered)	◐15%	✓Can be credited	—You can claim a credit within the limits; dividends are taxed every year
TFSA	✕15%	✕Can't be credited	—The 15% withheld is lost
RESP, FHSA	✕Usually 15%	✕Can't be credited	—Same as the TFSA

RRSP, RRIF (including spousal RRSPs)

🗽 US withholding: ✓Usually 0% (treaty exemption for retirement accounts)
🍁 Credit in Canada?: —Not applicable
📊 Looking only at US dividend withholding: —Least withholding

Regular account (non-registered)

🗽 US withholding: ◐15%
🍁 Credit in Canada?: ✓Can be credited
📊 Looking only at US dividend withholding: —You can claim a credit within the limits; dividends are taxed every year

TFSA

🗽 US withholding: ✕15%
🍁 Credit in Canada?: ✕Can't be credited
📊 Looking only at US dividend withholding: —The 15% withheld is lost

RESP, FHSA

🗽 US withholding: ✕Usually 15%
🍁 Credit in Canada?: ✕Can't be credited
📊 Looking only at US dividend withholding: —Same as the TFSA

What about Canadian-listed ETFs that invest in US shares?

Canadian-listed ETF (holding US shares directly)

The US withholds 15% at the fund level

Still withheld when held in an RRSP

Can be credited when held in a regular account

The RRSP exemption applies only to US securities you hold directly

US-listed ETF

Held in an RRSP

Usually nothing withheld

But you buy in US dollars, so there are currency conversion costs

Held in a regular account, it also counts as foreign property for the T1135

Looking only at US withholding, the general approach is: hold high-dividend US shares and US-listed ETFs in your RRSP; use your TFSA for growth-oriented, low-dividend holdings or Canadian shares. In the end you also need to weigh the tax on RRSP withdrawals, tax-free growth in the TFSA, contribution room, how long you will hold the investments, currency conversion and trading costs, and investment risk. This is not trading advice.

Points to watch

Keep your W-8BEN current
Your broker will ask you to fill it in to show that you are a Canadian resident; without a valid W-8BEN, 30% is usually withheld.
Don't miss the T1135
US shares and US-listed ETFs in a regular account are specified foreign property, even when held at a Canadian broker; those in an RRSP or TFSA are not.
The US usually doesn't tax capital gains
When someone who isn't a US citizen or resident sells US shares, the US usually doesn't charge capital gains tax; Canada taxes the gain as usual.
US estate tax
US shares you hold directly are US assets, so watch this if the amount is large — see "Canadian Residents with US Shares or Property: The US Taxes to Watch" in the Cross-Border Tax series.

How Sheng Qian CPA can help

Review your accounts
Which accounts hold your US shares, whether too much has been withheld, and whether your W-8BEN is valid.
Placing assets with tax in mind
Which types of assets go in your RRSP, your TFSA or a regular account, and roughly how much less you would lose each year.
Claim it back at tax time
US tax withheld in a regular account is claimed as a foreign tax credit in your tax return; for prices, see "What Sheng Qian CPA Can Do for Investors: Tax Returns, Accounts and Annual Planning" in this series.

Sources

CRA: Income Tax Folio S5-F2-C1, Foreign Tax Credit
IRS: Form W-8BEN · Department of Finance Canada: Canada–United States Tax Convention

Disclaimer

This article is general information only and is not tax or investment advice. Everyone's situation is different; please consult a CPA and your investment adviser about your specific arrangements. Service fees are as set out in our written quote.