PFIC-Is this one?

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Joan9844
Posts: 2
Joined: Sat Apr 12, 2014 3:02 pm

PFIC-Is this one?

Post by Joan9844 »

The Globe and Mail (4 18/14) has a list comparing online brokers . One, called Q Trade Investor offers ETFs listed either on a Canadian or US exchange.

For a US citizen residing in Canada, is purchase of an ETF listed on a US exchange and held in a Canadian custodial account, considered a PFIC for purposes of US tax.
rlb
Posts: 139
Joined: Thu Feb 17, 2011 8:51 pm
Location: NB, Canada

Post by rlb »

The ETF has to be managed and operated inside the US to avoid being a PFIC. Normally, yes, these would be the ETFs you'd find listed on a US Exchange. But some Canadian companies list themselves both on Canadian and US exchanges (though I don't know whether ETFs ever do). It is simple enough to look up the address of the fund, say in a prospectus, and make sure it is a US one.

You will find US ETFs of Canadian stock market indexes available, managed in the US, and they are not PFICs. They will have higher management fees than nearly identical ETFs managed in Canada, though. Of course, if you are looking for a US index ETF of US companies, for example, VTI, you will be just fine, with minimal fees. Such an ETF is not a PFIC, even if held in a Canadian Custodial account. It is the stock or mutual fund which determines a PFIC, not the location of the custody of the shares.
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