Canadian investors commonly search for diversification by investing in the United States. There are some important tax consequences to consider when allocating U.S. investments in your portfolio, including the tax treatment of U.S. assets in taxable and Canadian-tax-sheltered accounts for dividends and other income types. This article provides an overview of some of the key facts: Tax implications of investing in the United States. Your investment advisor should be attentive to tax outcomes when structuring your portfolio.
Some Canadian investors should be particularly mindful of another ramification of U.S.-based investing: U.S. estate tax. As of 2019, if the value of your U.S. property at death exceeds US$60,000, your estate must file a U.S. tax return, whether or not any taxes are actually owed. Tax would not be payable if your worldwide assets are less than US$11.4 million. The worldwide asset threshold may reset to as low as US$5 million in 2025 unless new legislation is enacted. If both the U.S. property and worldwide asset thresholds are exceeded, you may owe U.S. estate tax. For an explanation of what counts as U.S. property and additional details, see our article on U.S. estate tax for Canadians in 2019.
If these topics are of concern to you, be sure to consult your investment advisor or portfolio manager.