My bro bought his house that is principal residence, and doesn't want buy more houses. He doesn't qualify RDSP (no disability) or RESP (no kids). He heard of Swap ETF, but he wants pick single stocks like VGR and ZNGA.

If he opens regular unregistered account with Questrade, he will pay tax on dividends! How can he avoid or defer tax legally? Please don't just tell him talk to CFA or CPA — he wants something he can set up himself.

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    'How to avoid or defer tax' is an incredibly broad question. In fact it is so broad, there is an entire career devoted to it! Most likely though, your brother should accept that taxes exist, and that he will need to pay them. – Grade 'Eh' Bacon Feb 27 at 16:47
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    Whatever he thinks of doing, tell him to make sure that the cost of avoiding taxes does not exceed avoided tax. – Dan Bracuk Feb 27 at 17:29
  • It really isn't necessary to avoid paying taxes if you're already maxing your RRSP and TFSA... – Ian MacDonald Feb 27 at 17:37

RRSPs and TFSAs are the only tax protected accounts he'll be able to access. If he has a spouse/partner who hasn't maxed out their RRSP or TFSA he could give them money and they could invest it to avoid the taxes on dividends.

If he has a business or knows someone he'd like to partner with he could invest in that instead and write off any contribution he made as a business expense.

Even if he decides to go the route of putting it into a non-registered account it's not a ton of taxes. I don't see any evidence that ZNGA has paid dividends before though, and the Trailing Annual Dividend Yield on VGR is 12.20%, so if he was making around 100K from regular income his marginal tax rate would be around 30%, so really he's only paying 3.66% tax on any money he invests in there (assuming he invested all of it into VGR). He could also look for other funds that don't pay dividends.

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  • 'Business contributions' are highly unlikely to be considered deductible in the way laid out here. – Grade 'Eh' Bacon Feb 27 at 16:47
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    Also VGR and ZNGA are both traded on the US stock exchange so he'll be subject to foreign withholding taxes. Ideally he should place international equities in his RRSP and domestic equities in his TFSA or non-registered accounts since international equities aren't subject to the same withholding taxes when held in an RRSP. – Dugan Feb 27 at 16:56
  • Also, you can't simply gift investments to a spouse without consideration of potential implications of income attribution. Frankly there is a lot that is off-base on this answer. – Grade 'Eh' Bacon Feb 27 at 17:18
  • Sorry @Grade 'Eh' Bacon I should have said that OP could loan their spouse the money: turbotax.intuit.ca/tips/… – Dugan Feb 27 at 19:23

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