The Advantages To Canadian Investment Firms

by David Jenyns on September 29, 2008

In 1952 a number of open-end funds that specialized in Canadian securities were organized for distribution to investors in the United States. What are the various tax advantages that these firms can offer?

1. Since no dividends are paid, so long as a United States citizen retains his shares no United States tax liability is incurred.

3. Under Canadian law, capital gains are not regarded as taxable items of income.

4. The NRO firms can choose between two tax treatments:
Dividends received by Canadian corporations from other tax-paying Canadian corporations are not taxable. If this latter choice is made, an investor must pay a 15 percent Canadian withholding tax on whatever portion of his proceeds represent undistributed dividend income of the fund.

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