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Everybody welcome back to drawbridge finance my name's Levi, and I'm not a professional investor I don't work in the financial industry, and I'm out here on the water beautiful Christina Lake it's a little smoky today we don't have the sale up at all we're just cruising around, and I wanted to make a quick video about foreign dividend income tax all right, so I'm not on the boat anymore we've finished with that it was a fantastic day we did some swimming and had some lunch on the beach it was great, but I decided to sell what was not the place to be shooting a financial video, so I'm doing it now that I'm back at my mom's place we're here for a little visit, and I'm just going to go through this really quickly with you guys because I realized in talking to people that nobody really understands how the foreign dividend withholding tax actually works, and it's quite interesting because as a Canadian it's really easy for me to invest in dividend paying equities that are in the United States but when I do that the dividend doesn't actually get paid in full to me, so I'll give you guys a quick example now if I owned a stock on one of the American exchanges like the Nasdaq and that stock pays out 100 dividends I don't actually receive that hundred dollars if it was a Canadian stock, and they paid out 100 Canadian I would receive a whole hundred dollars Canadian but if I owned an American stock I actually only receive 8500 they take 15 as a withholding tax so as a Canadian buy hundred-dollar dividend that has been paid out by the American company that I'm investing in I actually only receive 85 this can be quite confusing because a lot of people think they're going to pay tax on the interest that they earn or on the dividend later and that is also true, but this happens actually before you even get it into your account the crazy thing is we can actually avoid it and collect a hundred percent of those American dividends if we invest in with those stocks in our RESP account any other account that we have in Canada if we have a margin account which I was referred to as an N RSP or if we have an FSA both of those do not have the exemption and that withholding tax gets taken off and of course I've built a little spreadsheet and I want to show you guys exactly what happens with the dividend payout the first thing I want to go over is the foreign dividend withholding tax of 15 on US stocks so the US stock pays 100 dividends before we get it in our account there's a 15 us withholding tax and the US dividend that we actually receive in our Canadian account is 85 so let's take a look it's a couple of examples, so you've got Canadian bank Corp this is exactly what it sounds like it's a dividend equity the ticker is B K it trades on the Toronto Stock Exchange and the price today is 1265 if someone was to buy a hundred shares and invest twelve hundred and sixty-five dollars the monthly dividend payout would be ten point three cents there's twelve dividend payouts...
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