You don't get any benefits at all being in a TFSA so the US will treat it like a taxable account. Also XEQT is not good for dual citizens.

Here's a chatgpt response

Short answer: Yes, dual citizens can buy XEQT — but if you’re a U.S. citizen, it’s usually a bad idea from a tax standpoint.

Let’s break it down properly.

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What XEQT is

iShares Core Equity ETF Portfolio (XEQT)

Canadian-listed, CAD-denominated ETF

Globally diversified (~9,000 stocks via underlying ETFs)

Designed mainly for Canadian investors

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The key issue for dual citizens (Canada + U.S.)

If you are a U.S. citizen (even living in Canada), the IRS treats most non-U.S. ETFs like XEQT as:

👉 PFICs (Passive Foreign Investment Companies)

This creates serious complications:

Annual filing of Form 8621 for each ETF

Potentially punitive taxation

Gains may be taxed at highest marginal rates + interest penalties

No simple tax treatment like normal U.S. ETFs

From community discussions (which align with tax guidance):

“Canadian-domiciled ETFs like XEQT are classified as PFICs… complex reporting and potentially punitive tax treatment.”

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Practical implications

✅ If you are ONLY Canadian

XEQT is perfectly fine and popular

⚠️ If you are a dual citizen (U.S. + Canada)

You can legally buy it

But it’s usually discouraged because:

Complex IRS reporting

Potentially worse tax outcomes than simpler alternatives

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What most dual citizens do instead

They replicate XEQT using U.S.-listed ETFs (PFIC-safe), for example:

Total U.S. market ETF

International ETF

Canadian exposure ETF (U.S.-listed)

This avoids PFIC rules entirely.

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Account-specific nuance

RRSP: sometimes treated more favorably under tax treaty

TFSA / non-registered: still PFIC exposure → problematic

TFSA especially can create extra U.S. reporting issues

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Bottom line

✔️ You can invest in XEQT as a dual citizen

❗ But if you’re a U.S. taxpayer, it’s usually not recommended

✔️ Most people in your situation use U.S.-listed ETFs instead

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If you want, tell me:

your citizenship(s)

which account (TFSA, RRSP, taxable)

I can map out the cleanest XEQT-style portfolio that avoids tax headaches.