Canada · Cross-border

US stocks in a TFSA vs RRSP: Canadian withholding tax

Last checked: October 29, 2026 · By AP Dult · AI-assisted

General information and education only. This is not a recommendation to buy U.S. stocks or to prefer one account type. Withholding depends on your broker’s coding, forms, and the treaty facts of your account.

Canadians who hold U.S.-listed shares often ask: should the dividends sit in a TFSA or an RRSP? The Canada–United States tax convention is the starting point — not social-media rules of thumb.

The 15% dividend rate (Article X)

Article X of the consolidated Canada–United States Convention says dividends paid by a company resident in one country to a resident of the other may be taxed in both — but if the Canadian resident is the beneficial owner, U.S. tax on those dividends is generally capped at 15% of the gross amount (or 5% when a company owns at least 10% of the voting stock of the payer). That 15% figure is what people mean by “treaty withholding” on portfolio U.S. dividends.

The pension/retirement exemption (Article XXI)

Article XXI(2) goes further for certain organizations. Dividend and interest income described in Articles X and XI that is derived by a Canadian-resident trust, company, organization or other arrangement that is generally exempt from income taxation in Canada and operated exclusively to administer or provide pension, retirement or employee benefits is exempt from income taxation in the United States for that year (subject to Article XXI’s trade-or-business / related-person limits).

An RRSP is a registered retirement savings plan under the Income Tax Act — i.e., a retirement arrangement. Industry and IRS private-letter practice have long treated RRSPs as fitting Article XXI(2)’s pension/retirement wording, which is why many custodians apply 0% U.S. withholding on U.S. dividends inside an RRSP when the account is correctly documented.

A TFSA is a tax-free savings account. It is not described as a plan operated exclusively to provide pension or retirement benefits. So the Article XXI(2) exemption wording does not map onto a TFSA the way it maps onto an RRSP. In practice, U.S.-source dividends in a TFSA are commonly withheld at the 15% treaty rate — and because TFSA income is not taxed in Canada, there is generally no Canadian foreign-tax credit to reclaim that U.S. tax.

Form W-8BEN (what brokers ask for)

The IRS’s Form W-8BEN is the Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals). The IRS says to give Form W-8BEN to the withholding agent or payer if you are a foreign person and you are the beneficial owner of an amount subject to withholding, and to submit it when requested — whether or not you are claiming a reduced rate of, or exemption from, withholding.

What it means for you: brokers typically need a W-8BEN on file for Canadian residents holding U.S. securities. Treaty text sets the rates; account coding and the forms on file control the actual withholding your statement shows. Confirm with your broker how each registered account is documented.

Filing a W-8BEN through the broker gets the treaty rate but does not remove the roughly 15% U.S. withholding on dividends held in a TFSA.

What it means for you

• Dividend-heavy U.S. equity exposure is where the TFSA vs RRSP withholding difference shows up most clearly.
• Capital gains inside either registered account are a different story from dividend withholding — do not mix the concepts.
• Confirm with your broker how the account is coded and which forms (including W-8BEN) are on file. Treaty text is the rule; your statement is the check.
• For the broader TFSA vs RRSP contribution rules (not withholding), see our TFSA vs RRSP basics guide.

FAQ

What is the usual U.S. treaty rate on dividends to a Canadian resident?

Generally 15% under Article X for portfolio dividends to a Canadian resident beneficial owner (5% in certain corporate ownership cases).

Why can an RRSP avoid U.S. dividend withholding that a TFSA often cannot?

Article XXI(2) exempts certain Canadian pension/retirement arrangements; RRSPs fit that category, TFSAs do not. So U.S. dividends in a TFSA are commonly withheld at the 15% treaty rate.

What is Form W-8BEN and why do brokers ask for it?

IRS Form W-8BEN certifies foreign status for U.S. withholding. Give it to the withholding agent when requested. Brokers typically need it on file; coding controls the actual rate applied. Filing a W-8BEN through the broker gets the treaty rate but does not remove the roughly 15% U.S. withholding on dividends held in a TFSA.

Is this investment advice about where to hold US stocks?

No — treaty and form summary only.

Sources

1. Department of Finance Canada, consolidated Canada–United States tax convention — Article X (Dividends; 15% / 5% limits) and Article XXI (Exempt Organizations; pension/retirement exemption): canada.ca …/united-states-america-convention-consolidated-…
2. Internal Revenue Service, About Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting — Individuals): irs.gov/forms-pubs/about-form-w-8ben
3. Canada Revenue Agency, TFSA topics (tax-free savings account framework): canada.ca …/tax-free-savings-account.html
4. Canada Revenue Agency, RRSP topics (registered retirement savings plan framework): canada.ca …/rrsps-related-plans.html

Treaty text and IRS W-8BEN page accessed Thu Oct 29, 2026. Broker procedures can change; verify on your statements.

General information and education only.

← Canada hub