Is there any way to open a Canadian brokerage account while still being a U.S. citizen? I would like to open an online brokerage account if possible in Canada to trade on the TSX (I hate ADR).
Although this is technically possible, you may find that foreign brokers don't want your business because the fact that you're a US citizen creates an undue amount of bookkeeping for them. Here are a few things you have to keep in mind:
Since the passage of the Foreign Account Tax Compliance Act (FATCA), foreign financial institutions are required to enter into an agreement with the IRS to identify any of their account holders who are US citizens. They're required to disclose receipts, withdrawals, balances, etc. U.S. payors making payments to non-compliant foreign financial institutions are required to withhold 30% of the gross payments.
According to Wikipedia, the only countries that have concluded sharing agreements with the IRS are the United Kingdom, Denmark, Mexico, Ireland, and Switzerland. I don't know how this would apply to Canada if they don't have an agreement with the US, but you need to be very careful if you do open an account because you do not want to run afoul of the IRS.
There are numerous additional forms you will need to file with the IRS and the Treasury Department if you do this. Consult a tax professional with experience in such matters to make sure you don't miss something important.
Virtually all of the information I could find advising individuals to open brokerage accounts abroad comes from Jeff Opdyke. Here are two such articles: , . I'm a little wary of this glowingly positive advice because he's selling a book concerned with this topic exactly. Maybe it is as easy as he says if you open an account in a developed country like Canada, but he describes opening accounts in places like Cambodia, Zambia, etc. and I can't imagine it's a simple as he makes it out to be, especially not after the passage of FATCA. He suggests using Google to find a good brokerage firm in a foreign country, which sounds like you could easily fall victim to a phishing scheme if you happen upon the wrong broker. I always get spam emails from Nigerian princes asking me to invest with them, so maybe I'll stick with that for the time being.
I recommend you a) find an American broker that allows you to trade on international exchanges, because it will almost certainly be less work for both you and them, of b) find a tax professional with relevant experience to guide you through your first tax season if you choose to pursue opening a foreign brokerage account.
I have a more pressing reason to get a Canadian brokerage account (I want to transfer my Canadian pension from a previous job in Canada to a self-directed Canadian Locked In Retirement Account (LIRA)) and after two afternoons on the phone I can find no Canadian broker willing to open an account for a nonresident.
It doesn't seem to matter that I lived and worked there recently, and will pay Canada resident taxes this year.
If anyone else finds themselves in this situation, open a LIRA before leaving Canada and before closing your Canadian bank accounts.
Interactive Brokers allows trading on the TSE directly.
And has incredibly low cost currency and futures trading.
I use it for Canadian preferred stocks.