What happens to dividends on stock held in TFSA or RRSP account?
"For an RRSP, you do not have to pay taxes on money or investments until you withdraw the money. If you do not reinvest the dividends but instead, take them out as cash, that would be withdrawing the money. For mutual funds, you would normally reinvest the dividends if holding the investment inside an RRSP. For stocks, I believe the dividends would end up sitting in the cash part of your RRSP account (and you'd probably use the money to buy more stocks, though would not be required to do so). Either way, you do not pay tax on this investment income unless you withdraw it from your RRSP. For example, you invest $10,000 inside your RRSP. You get the tax benefit from doing so. You get dividends of $1,000 (hey, it was a good year), and use these to buy more stock. As the money never left your RRSP account, you are considered to have invested only your initial $10,000. If instead, you withdraw the $1,000 in dividends, you are taxed on $1000 income. TFSA are slightly more complicated. You don't get a tax benefit from your initial contribution, but then do not pay tax when you withdraw from the TFSA. Your investment income is still tax-free, and you are (generally) much more limited in how much you can contribute. For example, you invest $10,000 inside your TFSA. You get dividends of $1,000, and use these to buy more stock. Your total contributions to your TFSA remains at $10,000 as the money never left your account. You could instead withdraw the $1000 from your TFSA and would not pay tax on it. In the next calendar year (or later) after the withdrawal, you could ""repay"" the $1000 you took out without suffering an overcontribution penalty. This makes TFSA an excellent place to park emergency funds, as you can withdraw and subsequently replace the investment while continuing to get the tax benefits on your investment income. RRSPs are better for retirement or for the home buyers plan. In general, you should not be withdrawing money from either your TFSA or RRSP, except in emergencies, when retiring, or when purchasing a home. I prefer indexed mutual funds or money market accounts for both my RRSP and TFSA rather than individual stocks, but that's up to you."
"Do I have to pay the stock investment income tax if I bought some   stocks in 2016, it made some profits but I didn't sell them at the end   of 2016? You pay capital gains taxes only when you sell the stocks. When you sell the stock within a year you will pay the short term capital gains rate which is the same rate as your ordinary income. If the stock pays dividends, however, you will have to pay taxes in the year that the dividend was paid out to you. I bought some stocks in 2011, sold them in 2012 and made some gains.   Which year of do I pay the tax for the gains I made? You would pay in 2012, likely at the short term gain rate. I bought some stocks, sold them and made some gains, then use the   money plus the gains to buy some other stocks before the end of the   same year. Do I have to pay the tax for the gains I made in that year? Yes. There is a specific exception called the ""Wash Sale Rule"", but that would only apply if you lost money on the original sale and bought a substantially similar or same stock within 30 days. Do I get taxed more for the money I made from buying and selling   stocks, even if the gains is only in hundreds? More than what? You pay taxes based on the profit you make from the investment. If you held it less than a year it is the same tax rate as your regular income. If you held it longer you pay a lower tax rate which is usually lower than your regular tax rate." First, if your stock is trading at $1 and you transfer the 5000 shares in-kind to your TFSA on August 2, 2011, you are deemed to have disbursed that stock in your (assumed) non-registered account. This may have tax consequences depending on the ACB of the original purchase. As for your TFSA overcontribution, you will only have to pay the 1% monthly penalty on the value of the overcontribution, i.e. $5000. You will pay 1%/month for each month the overcontribution exists, regardless of what the value of the overcontributed assets end up being. Thus, you'll pay a $250 penalty for an overcontribution life of 5 months. The stock price could go to $2 or $0, but you'll pay a fixed tax of $250 for the value of the initial overcontribution. See these articles at the CRA website for more information:Tax payable on excess TFSA amount and Examples - Tax payable on excess TFSA amount. Cap gains and qualified dividend taxes are the same (see link below)  First let's assume were talking about a taxable account (in a tax-deferred/exempt account taxes don't really matter) capital gains taxes are only realized at the end sale, so share buybacks will not have any adverse until the gains are realized, which in theory should be as far out as possible, whereas dividends are taxed in the year they are received. because of the compounding the buybacks are better than the dividends (which pay tax up-front versus on the back end with buybacks). Yes investors are irrational, but I'm trying to take the long-term rational approach. Additionally, dividends are taxed at cap gains rates if the position is held 60+ days, so all else held equal, share buybacks are more tax-efficient in the long-run.   https://turbotax.intuit.com/tax-tools/tax-tips/Investments-and-Taxes/Guide-to-Taxes-on-Dividends/INF19201.html The catch is that you're doing a form of leveraged investing. In other words, you're gambling on the stock market using money that you've borrowed. While it's not as dangerous as say, getting money from a loan shark to play blackjack in Vegas, there is always the chance that markets can collapse and your investment's value will drop rapidly. The amount of risk really depends on what specific investments you choose and how diversified they are - if you buy only Canadian stocks then you're at risk of losing a lot if something happened to our economy. But if your Canadian equities only amount to 3.6% of your total (which is Canada's share of the world market), and you're holding stocks in many different countries then the diversification will reduce your overall risk.  The reason I mention that is because many people using the Smith Maneuver are only buying Canadian high-yield dividend stocks, so that they can use the dividends to accelerate the Smith Maneuver process (use the dividends to pay down the mortgage, then borrow more and invest it). They prefer Canadian equities because of preferential tax treatment of the dividend income (in non-registered accounts). But if something happened to those Canadian companies, they stand to lose much of the investment value and suddenly they have the extra debt (the amount borrowed from a HELOC, or from a re-advanceable mortgage) without enough value in the investments to offset it. This could mean that they will not be able to pay off the mortgage by the time they retire! It is the first time I encounter redemption programme and I would like to know what are my options here You can hold on to the shares and automatically receive 2.25 SEK per share some time after 31-May; depending on how fast the company and its bank process the payouts. Alternatively you can trade in the said window for whatever the market is offering. how is this different from paying the dividend? I don't know much about Sweden laws. Structuring this way may be tax beneficial. The other benefit in in company's books the shareholders capital is reduced. can I trade these redemption shares during these 2 weeks in May? What is the point of trading them if they have fixed price? Yes you can. If you need money sooner ... generally the price will be discounted by few cents to cover the interest for the balance days. Dividends and interest are counted under operations for the purpose of this tweet. This is pretty much entirely a non-story. I'm not sure exactly how they're dividing it up, but it looks like they're only counting stock appreciation as capital gains and counting things revenue from sales (from their subsidiaries as well) under operating income.   This is just from a quick glance over their statement of earning, but that's what it looks like to me. "In the case of a specific fund, I'd be tempted to get get an annual report that would disclose distribution data going back up to 5 years.  The ""View prospectus and reports"" would be the link on the site to note and use that to get to the PDF of the report to get the data that was filed with the SEC as that is likely what matters more here.  Don't forget that mutual fund distributions can be a mix of dividends, bond interest, short-term and long-term capital gains and thus aren't quite as simple as stock dividends to consider here." Given you other question and your resulting marginal tax rate, you may want to optimize where you hold each type of security.  If you still plan to have a regular investment account, it's hard to beat the low tax rate of Canadian dividends. In a TFSA, you won't pay tax on the dividend income, and you won't get a dividend tax credit either.  For some people in BC this actually costs them money as they have negative marginal dividend tax rates.  For you it seems to be 6%. Contrast this with any other holding in your regular account, interest at full marginal rates, and cap gains at half that.  Dividends still win in a regular account.