Yes, you can hold US stocks in your TFSA — but there’s a catch that costs most Canadians money without them realizing it. The US government withholds 15% of all dividends paid to a TFSA because the Canada-US tax treaty only exempts “pension” accounts (RRSPs) from withholding, and the IRS doesn’t recognize the TFSA as a pension. On a $100,000 US stock portfolio yielding 3%, that’s $450 per year in lost dividends you’ll never recover. For high-dividend US holdings, your RRSP is almost always the better choice. For the full tax breakdown, see US dividend withholding tax in TFSA Canada.
Can You Hold US Stocks in TFSA?
Short Answer: Yes
Allowed
Details
US stocks
Yes
US ETFs
Yes
US bonds
Yes
Other US securities
Generally yes
The Withholding Tax Issue
How It Works
Account Type
US Dividend Withholding
RRSP
0% (tax treaty exemption)
TFSA
15% (no exemption)
Non-registered
15% (but foreign tax credit)
If you are comparing accounts more broadly, our TFSA vs RRSP for beginners guide covers the higher-level decision.
For portfolios under $100,000, the withholding tax drag on US stocks in a TFSA amounts to less than the cost of a few restaurant dinners per year — not worth restructuring your accounts over. But as your portfolio grows, the gap compounds significantly. At $500,000 with 40% US allocation, you’re losing $1,200+ annually. At that level, it’s worth holding your US dividend payers in an RRSP and keeping Canadian stocks, growth stocks, and bonds in your TFSA. The ideal setup: Canadian dividends and high-growth US stocks (which pay little or no dividends) in the TFSA, US dividend ETFs like VUN in the RRSP.
If you want a simple Canadian-listed alternative instead of holding US securities directly, start with our best ETFs in Canada.
Summary Recommendations
Quick Decision Guide
The Bottom Line
US stocks are perfectly fine to hold in your TFSA — you just lose 15% of the dividends to US withholding tax. If you mainly hold growth stocks with little or no dividend (like Amazon or Google), the TFSA is just as good as an RRSP. If you hold high-yield US dividend stocks or ETFs, put them in your RRSP instead and fill your TFSA with Canadian equities. Don’t let perfect tax optimization prevent you from investing — even with the 15% dividend drag, a TFSA full of US stocks beats a non-registered account every time.