Buying US Stocks from Canada: The Complete Guide

Why Buy US Stocks?

The TSX is heavily concentrated in banks, energy, and mining. If you only invest in Canadian stocks, you're missing exposure to the world's largest tech companies, healthcare giants, and consumer brands.

• Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Amazon (AMZN) — none of these trade on the TSX.
• The S&P 500 has historically outperformed the TSX over most long-term periods.
• Diversifying into US stocks reduces your dependence on the Canadian economy.
• Many US companies pay growing dividends with decades-long track records.

You don't need to go all-in on US stocks — but having zero US exposure is a real risk for a Canadian portfolio.

How to Buy US Stocks from Canada

There are two main approaches:

1. Buy directly on US exchanges. Most Canadian brokerages (Wealthsimple, Questrade, TD Direct, IBKR) let you buy stocks on the NYSE and NASDAQ. You'll need to convert CAD to USD first — this is where currency costs come in.
2. Buy CAD-listed ETFs that hold US stocks. ETFs like VFV (Vanguard S&P 500, TSX-listed) or XUU (iShares Total US Market) let you buy US exposure in Canadian dollars. No currency conversion needed on your end — the fund handles it internally.

Both are valid. Direct US stocks give you more control. CAD-listed ETFs are simpler. The right choice depends on your account type and how much you're investing.

Currency Conversion: Don't Pay 2.5%

When you buy US stocks, you need US dollars. Your broker will happily convert your CAD to USD — but most charge a 1.5% to 2.5% spread on every conversion. On a $10,000 purchase, that's $150–$250 gone before you even invest.

Norbert's Gambit

Norbert's Gambit is a workaround that cuts your conversion cost to nearly zero. Here's how it works:

1. Buy a stock or ETF that trades on both the TSX (in CAD) and a US exchange (in USD). The most common one is DLR / DLR.U on the TSX.
2. Buy DLR on the TSX in Canadian dollars.
3. Call your broker and ask them to "journal" your DLR shares to DLR.U (the USD side).
4. Sell DLR.U — now you have USD in your account.

Total cost: two small commissions (often $0 at discount brokers) instead of a 2% spread. The journaling step usually takes 2–3 business days.

USD Accounts

Most brokerages let you hold a USD sub-account inside your RRSP or TFSA. Once you convert to USD (via Norbert's Gambit or otherwise), keep it in USD. Don't convert back and forth — every round trip costs you.

Wealthsimple note: Wealthsimple charges 1.5% on currency conversion unless you're on their Plus plan ($10/month), which includes USD accounts and free conversions.

Withholding Tax on US Dividends

When a US company pays you a dividend, the IRS automatically withholds 15% before it reaches your account. This is called withholding tax.

For example, if you own $10,000 of a US stock paying a 3% dividend ($300/year), the IRS keeps $45 and you receive $255. This happens automatically — you don't file anything with the IRS.

Form W-8BEN

To get the reduced 15% rate (instead of the default 30%), you need to have a W-8BEN form on file with your broker. Most Canadian brokerages handle this electronically when you open your account. It's valid for 3 years and certifies that you're a Canadian tax resident entitled to the US-Canada tax treaty rate.

If you haven't filed a W-8BEN, you're paying 30% withholding instead of 15%. Check with your broker — most let you sign it digitally in your account settings.

The RRSP Trick: 0% Withholding Tax

Here's the single most important thing to know about US stocks in Canada:

This doesn't apply to TFSAs, non-registered accounts, or RESPs. Only RRSPs and RRIFs get the exemption.

What this means practically: if you own US dividend-paying stocks or US-listed ETFs (like VOO or VTI), hold them in your RRSP. You'll save 15% on every dividend payment for the life of the investment.

For US stocks that pay little or no dividends (growth stocks like AMZN, GOOG, TSLA), it doesn't matter as much — the withholding tax only applies to dividends, not capital gains.

TFSA vs RRSP for US Stocks

The account you choose changes how much of your US dividends you actually keep.

Simple rule: US stocks that pay big dividends (banks, REITs, utilities) go in your RRSP. US growth stocks with small or no dividends go in your TFSA.

CAD-Listed US ETFs vs US-Listed

You can get S&P 500 exposure by buying VOO in USD on the NYSE, or by buying VFV in CAD on the TSX. Both track the same index. But there are meaningful differences.

Key nuance: CAD-listed ETFs like VFV are "wrapper" funds — they hold the US-listed VOO inside them. US dividends are withheld at the fund level (15%) before flowing to you. In an RRSP, you don't get the treaty exemption because you don't directly own the US securities — the Canadian fund does.

For most people investing under $50,000 in US exposure, the simplicity of CAD-listed ETFs outweighs the small cost difference. Over $50,000 in an RRSP, the math favors buying US-listed ETFs directly via Norbert's Gambit.

Reporting on Canadian Taxes

If your US stocks are inside a TFSA or RRSP, there's nothing to report on your Canadian tax return — the account is tax-sheltered.

If you hold US stocks in a non-registered (taxable) account, here's what you need to know:

• T3/T5 slips: Your broker will issue these for any dividends or distributions you received. US dividends show up as foreign income.
• Foreign tax credit: The 15% US withholding tax you paid can be claimed as a credit on your Canadian return using Form T2209 (Federal Foreign Tax Credits). This prevents double taxation — you get credit for taxes already paid to the US.
• Capital gains: When you sell US stocks at a profit, you report the gain in CAD (using the exchange rate on the date of sale). Only 50% of capital gains are taxable.
• Foreign property reporting: If your total cost of foreign assets exceeds $100,000 CAD at any point in the year, you must file Form T1135 (Foreign Income Verification Statement). This includes US stocks in non-registered accounts but excludes TFSA, RRSP, and other registered accounts.

Common Mistakes

1. Paying 2.5% on every currency conversion. Use Norbert's Gambit or a broker with free USD conversion. A 2% spread on every buy and sell is 4% round-trip — that's a year of returns gone.
2. Holding US dividend stocks in a TFSA. You're losing 15% of every dividend to US withholding tax with no way to get it back. Put them in your RRSP instead.
3. Not filing a W-8BEN. Without it, you pay 30% withholding instead of 15%. Most brokers handle this automatically, but check yours.
4. Buying CAD-listed ETFs in an RRSP for large amounts. You lose the treaty exemption on dividends. For big RRSP holdings, buy the US-listed version directly (VOO instead of VFV, VTI instead of XUU).
5. Converting USD back to CAD unnecessarily. If you sell a US stock and plan to buy another US stock, keep the USD. Every conversion costs you.
6. Forgetting Form T1135. If your foreign assets in non-registered accounts exceed $100,000 CAD, you must file this form. The penalty for not filing is $25/day, up to $2,500.
7. Ignoring currency risk. When the CAD strengthens against the USD, your US holdings lose value in CAD terms — even if the stock price didn't change. This works both ways: a weak CAD boosts your US returns.