I am considering very seriously the purchase of the Vice Fund. This fund can be bought directly at the company, via mail, for foreign investors.
They have no offices in Canada. And no clone of it exists in Canada.
If I buy 5000$ of that fund, sell it at 8000$, I will have a US capital gains of 3000$ (duh!).
A) Will the US firm emit a tax-related document for capital gains or is the investor responsible for declaring the CGs ?
B) Regardless of the answer of A), do I need to file taxes in the US for this year even if it is a one-shot transaction (like some hockey players who earn one-time income in some states) OR do our International Tax Agreements cover this territory (and thus I would only need to file taxes in Canada)?
The idea here is that if I do need to find an accountant who knows accounting on both sides of the border, I am afraid that the costs will just eat out my capital gains and I won’t be richer in the end.
As for paying U.S. tax, I highly doubt it. I was in the flip-side situation–I am a U.S. citizen who once upon a time had Canadian investments. I paid U.S. tax, not Canadian tax, on my capital gains and interest income.
It’s been a while since I’ve done my own taxes, but I used to use TurboTax, and it walked me through declaring my foreign investment income.
I’m no specialist either, so take this for what it’s worth. If you don’t want to hire an accountant, many major newspapers have personal finance Q&A columns. The question is interesting enough–and somewhat widely applicable given the worldwide interest in U.S. markets–to have a decent chance of a response.
What is the Vice fund? I’m pretty sure you have to pay Canadian capital gains tax on any foreign investments.There’s probably a way around it though.I’d ask a good accountant.
The fund invests Booze, Bombs, Butts and Casinos. In short, the Alcohol, Aerospace & Defense, Tobacco and Gaming industries.
One of it`s premises is that these industries are virtually recession proof. And I have the feeling that they have better numbers when times get hard.
Returns have been very good, historically and since the funds inception. (Something around 10-12% a year). Idd add it for diversification purposes. Talk about different!
More info can be found at:
Stock ticker: Vicex
So far, everybody I asked has a different answer. The longest technical one I got is this one:
I doubt that the fund or its transfer agent will do business with you, unless you misrepresent yourself as a US resident. They require you to pay them from a real US bank account. Try opening one from Canada! Taxation is one thing, securities law is another. It just isn’t legal for the vice fund to knowingly sell their fund to Canadians, nor for you to buy it. My US securities and taxation experience comes from investors who purchased their US holdings while US residents, then returned to Canada.
You will find it a pain in the neck to deal with the taxation issues: You need to file a Form W-8BEN every 3-4 years with the fund company. They will withhold a 30% flat tax on dividends and interest; nothing on capital gains. You must file a form 1040NR to get these taxes back.
Also remember that as a Canadian resident, you must pay tax in Canada on all world income. So your US capital gains are fully taxable in Canada; as would dividends and interest.
He sounds right but the company DID confirm me by email I could do everything through the mail. I will probably need to call a tax specialist, or find one that won`t charge me 300$ for the call.
I trade foreign stocks (US) all the time with no problems so I don’t see why it would be any different for a fund. Most of my trading is done in my self directed RRSP account so there is no capital gains tax. But they nail ya when you want to withdraw it!Only problem is you can’t have more the 20% foreign content in your RRSP which kinda sucks.IMO all your investing should be done within your RRSP anyway (unless you’re able to invest more than your limit). Some people disagree but if you do the math it works out better when you factor in the tax break. Anyway, I’m kinda babbling here and you probably already know all this as it is pretty basic knowledge.
How do you do your investing? Online account?
For now, Im in money markets. But when I hit a specific amount of cushion money, Ill invest all the extra into growth types of securities.
So far, Vice Fund got my attention the most. My ideal product would be a basket of hedge funds, but entry levels are too high for my savings levels. Theres a new insurance-backed hedge fund offered by National Life, but like I said, I need to attain the above cushion` level before considering that.
I hate RRSPs. Lets say you are in the 50% tax bracket. Fine if you are there for the really long term and dont withdraw until retirement.
But if a badluck happens before, and you need the money, what this means is that you must have had 100% growth just to annulate the 50% tax impact that this withdrawal will have on your annual income. Better have some dang good growth in the meanwhile. This also means until you do attain that 100% return, you`re not a cent richer, after-tax.
Just my too taxed 2 cents. Thanks for the feedback!