Now that the regulators have cracked down to "protect" Canadians from buying lower cost US mutual funds and paying lower US brokerage fees on stocks, it's no longer possible for all but the most determined Canadian investors to do so. This page remains as a testament to the effectiveness of our regulators in "serving" the Canadian public. With all the low-MER Canadian-based index funds, Canadian-based ETFs and US-based ETFs that are now available through Canadian brokers, there's also less need to own Vanguard's conventional open-end funds than there used to be.

Indeed Vanguard now offers a large number of ETFs that are simply different share classes of their conventional index funds. However, most of the information on taxation of US securities still remains valid and now also applies to US-based ETFs. This page is divided into three sections: A history of the latest regulatory crackdown on US brokers.

A set of Frequently-Asked Questions on buying mutual funds and stocks in the US. Canada's regulators "protect" us from the "evil" US securities industry So you really thought NAFTA was going to encourage cross-border trade, increase competition and benefit Canadians?

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Canadian investors will lose many times that much in higher fees. The final rebate will appear on, now get this, "your April TD Waterhouse brokerage statement.

How can this be?

Didn't they repatriate everyone in December? For more information check out the thread " U. Bid to resolve U. We have been advised by the Canadian securities regulatory authorities that we, as well as other US registered broker-dealers, must refrain from providing any investment services to residents of Canada.

The letter goes on to say that we've got 30 days to transfer our accounts out in kind to a Canadian broker or else they'll automatically transfer our accounts to TD Waterhouse Canada.

Send your complaints to their "special hotline" in the US atin Canada atyour MPP and your provincial [dictionary definition: For more information about this go to The Boomer website's Wealth discussion forum and look for related threads. In addition, all of the following have reportedly also declined to open accounts with Canadians: Datek DLJ Direct Dreyfus NDB Salomon Smith Barney Vanguard The following still appear to accept Canadian accounts since their new account application forms provide for Canadian addresses and for "Non-Resident Alien" status, however, they do not offer Vanguard mutual funds.

Bylo has no experience with these brokers. While these securities can be purchased in Canada, the brokerage fees are still much higher than in the US. It's not known yet if they accept accounts with Canadians. Why buy mutual funds or stocks in the US? Until recently Canadians who wanted low management expense ratio MER mutual funds, especially index funds, had no alternative but to look south to the United States.

In the US, Vanguard has been the pioneer in low-cost index mutual funds. A testament to their success is that they're now not only the second-largest US mutual fund complex, but also they manage more assets than the entire Canadian mutual fund industry. Some of us have "circumvented" this barrier by opening brokerage accounts with US discount brokers and then buying mutual funds over the Internet from them. At the same time many US discount brokers now offer not only trading over the Internet but also welcome accounts from Canadians.

The best-known of these is TD Waterhouse US Waterhouse. It's now the second-largest discount broker in the world. It also happens to be owned right here in Canada by the Toronto-Dominion Bank as part of its global TD Waterhouse formerly TD Greenline Investors Services discount brokerage operation. The information presented here is oriented to the purchase of Vanguard funds through Waterhouse because that's what I do.

It also lets me use their funds, fees, rules, etc. While you shouldn't construe this as an endorsement of either Vanguard or Waterhouse, FWIW I happen to be a highly satisfied customer of both organisations.

Waterhouse offers many other mutual funds besides Vanguard and Vanguard offers many more mutual funds besides those that are available through Waterhouse. If you find some good non-Vanguard funds or a broker who offers a wider selection of Vanguard funds than Waterhouse, please e-mail me the information. Recently some Canadian mutual fund companies, primarily some of the banks and Altamira, have introduced lower-cost index funds.

Still, these funds generally have MERs at or above 0. That's more than double what Vanguard charges. What's more, those MERs appear to be subsidised by the fund sponsors; they could go up at any time on 60 days notice, of course. In addition, there are now many lower-cost Exchange-Traded Funds ETFs available to Canadians, including XIU, SPY, QQQ, iShares et can you buy otc stocks on sharebuilder.

For many people these securities may be a viable alternative to Vanguard, but others like myself still find many benefits to dealing with a US discount broker. Are there more reasons to buy mutual funds or stocks in the US?

In addition to the reasons given in the above introduction: Can you buy otc stocks on sharebuilder Total Stock Market index fund, which tracks the entire US stock market Wilshire indexis probably the best single US mutual fund one can buy.

John Bogle certainly thinks so, and so do I not to suggest that our opinions should carry equal weight!

Some are even fully RRSP-eligible. However this latter feature also makes these derivative-based index funds poor optionbit binary trading for non-registered accounts.

It's also not clear a what additional costs related to the purchase of index futures are incurred by such funds and b which of these funds are currency hedged. But these are further digressions In addition US brokers give you access to a much broader selection of actively-managed mutual funds from Vanguard as well as many other companies than are available in Canada at MERs that are roughly half of what we're used to. You just can't create the kind of "slice and dice" portfolios advocated by the likes of Frank Armstrong, Bill Bernstein, Larry Swedroe et al using just Canadian-operated mutual funds.

You can trade ETFs and US stocks in the US for much lower obama stock market quotes msnbc fees than in Canada. US brokers generally offer free DRIPs for ETFs as well as ordinary stocks -- even when the issuer of the security does not offer their own DRIP.

These in-house DRIPs also feature a consolidated statement of all oregon cattle market prices, reinvestments, etc. And it's even possible though rather awkward to download some US broker statements from their website into software packages like Quicken. This means that every night they automatically transfer any cash in your account into a MMF.

Perbedaan call option dan warrant when you buy a security they automatically sell enough MMF on settlement day to pay for your purchase. Usually US brokers offer a variety of MMFs at competitive rates. Some of these MMFs even pay bonuses like American Airlines AAdvantage miles! To summarise, no, this isn't for everyone, but I for one am happy I made the move south.

What can you buy? Generally you can buy a wide variety of mutual funds. The selection varies from broker to broker but generally your choice is restricted to only the most popular funds. Unfortunately newer Vanguard funds, and especially their tax-managed funds, aren't yet available.

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Generally you can buy any stock that trades on the NYSE, AMEX, NASDAQ and OTC markets. Few if any US brokers offer stocks from the TSE, however, many Canadian large-cap and high-technology stocks also trade on the NYSE or NASDAQ. What does it cost? Remember, since Vanguard doesn't pay any remuneration to brokers, this fee helps Waterhouse to pay for the costs of executing your transactions and sending you monthly statements, etc. Also with Waterhouse you get a free Dividend Reinvesment Plan DRIPthere are no extra fees to make odd-lot less than shares transactions, no charge to get a registered stock certificate, etc.

With which US broker should I do business?

Check out the US broker ratings links below. Call or e-mail candidate brokers to confirm that they'll open an account with Canadians and to ask them to send you a new account application.

Be prepared for some surprises. However, Waterhouse doesn't seem to have the same restriction even though they also operate in both Canada and Australia. I'm not a lawyer, so all I can do is tell you what the regulators have told me. Yesaccording to the US Securities and Exchange Commission SEC in response to my inquiry: Can I open an Internet trading account with a dealer in another province, territory or country? Not unless that dealer is properly registered to trade in your province or territory.

Can I invest in securities via the Internet? Yes, but only if you are investing through the Internet site of a securities dealer that is registered to trade securities in your area. Also some investors living British Columbia have been denied US accounts by Waterhouse due to BCSC regulations.

US brokers generally aren't registered in Canada. And why should they be? US brokers should be registered and regulated in the US. If you're concerned about this issue, then consult a lawyer. How is income from US securities taxed? When you open an account with a US broker you should include: After each year-end you'll get an IRS S information slip equivalent of the Canadian T-5 that you can use to claim the credit on your Canadian tax return.

The bottom line is that you still have to pay regular Canadian taxes on this income, but at least you're not double-taxed by the IRS. There's no tax withheld on capital gains that arise when you sell a US stock or mutual fund. It's your responsibility to track and report this to Revenue Canada. Are there any other Canadian tax issues? If you own units in a non-resident mutual fund trust, you must file form T in respect of trust distributions, unless you have filed form T Are there any estate planning considerations?

Read the items linked-to below, and to be safe, consult an accountant or tax lawyer who is familiar with both Canadian and US regulations. Are there any other advantages? These can be particularly useful if you travel to the US.

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You can choose between VISA and Mastercard. Be sure to request a gold card. The cards come with the familiar green TD logo. Since TD doesn't offer Mastercards in Canada, another bonus if you get one from Waterhouse are the bar bets you can win with Canadian TD employees: Uncle Sam's long arm can even reach Canadian investors [29Apr00] BDO: Vanguard ETFs are now available in Canada!

No, this is not an advertisement. Vanguard has not paid for it. They probably don't even know that it's here.

Buying US securities from Canada

So why is it here? If someone should happen to follow this link and open an account with Vanguard, then it's just my modest contribution to help keep "our" fund expenses as low as possible. In a sense, it makes this site a "mutual mutual" funds website.

Information changes on an almost daily basis.

The funds, fees, terms, conditions, tax regulations, etc. Always investigate or consult a qualified financial planner, accountant or tax lawyer before you invest. This material is oriented to Canadians who want to buy US securities through a US broker. It may or may not also apply to citizens or residents of other countries.