The 15% the US Takes From Your Dividends, and When You Get It Back

A dividend is a slice of a company's profit, paid to you in cash. If you own a US stock that pays dividends, this post is about real money you may be losing every time a dividend is paid.

The Short Answer: What You Keep From $1,000 of US Dividends

Where you hold the US stock	The US keeps	Do you get it back?	You end up with
RRSP or RRIF	$0	Nothing to get back	$1,000
TFSA	$150	No, never	$850
FHSA, RESP or RDSP	$150	No, never	$850
Regular taxable account	$150	Yes, as money off your Canadian tax bill	$850, then $150 off your tax bill (you still owe Canadian tax on the full $1,000)
Any account, if your broker is missing a form called the W-8BEN	$300	Only with a lot of paperwork	$700

One big catch: the RRSP row only works if you own the US stock, or a US-listed fund like VOO, yourself. If you own a Canadian fund that holds US stocks, like VFV, the 15% is taken before the money reaches you, even in an RRSP. The examples below show why.

Rules as of November 2026. Dollar amounts are shown in one currency to keep the math simple.

What Is Withholding Tax?

Think of it as a toll at the border. Your dividend starts in the US and travels to your account in Canada. Before it crosses, the US takes its cut. That cut is called withholding tax, because it is held back before you ever get paid.

The normal toll is 30%. Canada and the US have a deal, called a tax treaty, that cuts it to 15% for people who live in Canada. To get the lower rate, you sign a short form with your broker called the W-8BEN. It tells the US you live in Canada. Most brokers ask you to sign it when you first buy a US stock. The form generally expires after about three years, so it is worth checking that yours is still current.

The same deal says the US will not tax money saved for retirement. The US looks at an RRSP and sees a retirement plan, so it waves the dividend through with no toll. It looks at a TFSA and sees a savings account, so it charges the toll.

Two things the toll never touches:

• Selling for a profit. If your US stock goes up and you sell it, the US takes nothing. The toll only applies to dividends.
• Canadian companies. Enbridge or a Canadian bank pays you a Canadian dividend, even if you bought the shares on a US stock exchange.

Four Investors, the Same $1,000

Ava, Ben, Chloe and Dev each own the same US dividend stocks. This year, those stocks pay each of them $1,000 in dividends. Here is what happens to each one.

Ava holds her US stocks in a TFSA

1. The US company pays $1,000.
2. The US keeps $150 at the border.
3. Ava's TFSA receives $850.
4. Canada never taxes money in a TFSA. That sounds good, but it means Ava has no Canadian tax bill to knock the $150 off.

Ava keeps $850. The $150 is gone for good.

Ben holds his US stocks in an RRSP. He bought them himself, on a US exchange

1. The US company pays $1,000.
2. The US sees a retirement account and takes nothing.
3. Ben's RRSP receives the full $1,000.

Ben keeps $1,000 for now. He will pay Canadian tax on it years from now, when he takes money out in retirement. That is true of everything in an RRSP.

Chloe also uses an RRSP. But she owns VFV, a Canadian fund that holds US stocks

1. The US company pays $1,000. It pays the fund, not Chloe.
2. The US looks at who owns the shares. It sees a Canadian fund, not a retirement account, so it keeps $150.
3. The fund passes the other $850 to Chloe's RRSP.

Chloe keeps $850. Her RRSP never got the chance to protect her, because the money was taxed before it reached her. This is the trap most people miss.

Dev holds his US stocks in a regular taxable account

1. The US company pays $1,000.
2. The US keeps $150.
3. Dev's account receives $850.
4. At tax time, Dev tells the Canada Revenue Agency (CRA) he earned the full $1,000. He also tells them the US already took $150.
5. Canada takes $150 off what Dev owes. This is called the foreign tax credit. It is money off your tax bill, not a cheque.

Dev gets the $150 back. But he still pays Canadian income tax on the $1,000, the same as he would on any income. How much he really keeps depends on his income, which is the next section.

	Ava (TFSA)	Ben (RRSP, US-listed)	Chloe (RRSP, Canadian fund)	Dev (taxable)
Dividends paid	$1,000	$1,000	$1,000	$1,000
US keeps	$150	$0	$150	$150
Lands in the account	$850	$1,000	$850	$850
Is the $150 recovered?	No	Nothing was taken	No	Yes, off his tax bill

How Dev Gets His $150 Back, at Three Income Levels

Here is the rule in one line: Canada lets you subtract the US tax from your Canadian tax on that same money, but never more than the Canadian tax itself. So the 15% only comes back if you owe Canada at least that much.

Canada taxes US dividends like a paycheque, at your normal tax rate. They do not get the special break that Canadian dividends get.

Dev's situation	Canada's tax on $1,000	Minus the $150 the US took	Dev pays Canada	Dev keeps in total	Did the US tax cost him extra?
Retired, very low income, owes no tax	$0	Nothing to subtract from	$0	$850	Yes, $150
Middle income, about 30% tax rate	$300	$150	$150	$700	No
High income, about 53% tax rate	$535	$150	$385	$465	No

Look at the middle row. If the US had taken nothing, Dev would have paid Canada $300 and kept $700. With the US tax, he pays the US $150 and Canada $150, and still keeps $700. The total tax is the same. It is just split between two countries.

Now look at the top row. Dev owes Canada nothing, so there is nothing to subtract the $150 from. He loses it, just like Ava in her TFSA.

Tax rates in this table are rounded examples. Your real rate depends on your province and income. Dev's tax software does this math for him on a form called the T2209.

Does 15% Really Matter?

It depends on how much your stocks pay in dividends. The US only takes 15% of the dividend, not 15% of your whole investment.

An S&P 500 fund pays about 1% a year in dividends right now. Losing 15% of that costs you about 0.15% of your money each year. That is about the same as the yearly fee on a cheap index fund.

A portfolio of high dividend US stocks might pay 3.5% a year. Losing 15% of that costs about 0.5% a year. That adds up.

Here is $100,000 left alone for 25 years, growing 7% a year with dividends reinvested:

Dividend yield	Kept in an RRSP (no US tax)	Kept in a TFSA (15% lost)	Difference after 25 years
1% (like an S&P 500 fund)	$542,743	$524,038	$18,705
3.5% (high dividend stocks)	$542,743	$479,945	$62,799

This compares only the 15% toll. It leaves out that RRSP withdrawals are taxed later and TFSA withdrawals are not.

S&P 500 yield is about 1% as of late 2026, from iShares and SPDR fund data. The 3.5% row is an example, not a real fund.

What to Do

• Put your biggest US dividend payers in your RRSP. Buy them directly, or through a US-listed fund like VOO or VTI. That is the only way to skip the 15%.
• Use your TFSA for things the toll does not touch. Canadian dividend stocks pay no US toll. US growth stocks that pay little or no dividend lose almost nothing.
• Don't panic about a Canadian fund like VFV. On a 1% yield the cost is small. If your RRSP is small, switching to VOO may not be worth it, because changing Canadian dollars into US dollars costs money too.
• Check your statements. If you see 30% taken instead of 15%, your W-8BEN form is missing or expired. Ask your broker to fix it. If you see any US tax taken in your RRSP on a US-listed stock or fund, call your broker. That should not happen.
• In a taxable account, keep your tax slips. Your broker or fund sends a slip showing the US tax you paid. Your tax software uses it to give you the money back.

Quick Answers

Why does the RRSP get a pass but not the TFSA? The deal between Canada and the US only protects accounts built for retirement. The US counts the RRSP and RRIF, and locked in retirement accounts, as retirement plans. The TFSA can be used for anything, so it does not count. Neither do the FHSA, RESP or RDSP.

Can I use the lost TFSA tax as a credit somewhere else? No. The money off your tax bill only works against Canadian tax owed on that same dividend. Money in a TFSA never owes Canadian tax, so there is nothing to subtract from. You also can't save the credit for a later year.

If a Canadian fund pays the US tax, does that show up anywhere? Only in a taxable account. Each year the fund sends you a tax slip called a T3. One box shows your share of the US dividends before the tax was taken. Another box shows your share of the US tax paid. You report both, and you get the tax back just like Dev. In an RRSP or TFSA, you get no slip, so there is no way to claim it.

Does a US-listed fund in my RRSP avoid all foreign tax? Only the US part. If a US-listed fund holds stocks from other countries, like VXUS, those countries can still take their own tax before the dividends reach the fund. The treaty only waives the US toll.

Do I owe US tax when I sell? No. The US does not tax your profit when you sell a regular US stock. The 15% is only on dividends.

What about US stocks with very high payouts, like pipeline partnerships? Be careful. Some US companies are set up as partnerships, often called MLPs. Their payouts are not normal dividends, so the US can keep up to 37%, even in an RRSP. It also holds back 10% of the sale price when you sell, even if you lost money. Most Canadians are better off skipping them.

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The Fine Print

Rules and numbers as of November 2026. I am not a tax professional, and this is not tax advice. Your own situation may be different, so check with a tax pro before you move money around.

Where this comes from, if you want to check:

• The Canada US tax treaty, Department of Finance Canada
• IRS ruling that RRSPs and RRIFs qualify for the retirement exemption
• CRA Form T2209, the foreign tax credit form
• PWL Capital: which ETFs lose the 15% in which accounts
• Scotia Wealth Management: Canadians owning US assets
• MoneySense: why US partnerships get taxed in an RRSP