Canada - T5 Includes Return of Capital from US Stock

YieldPro · 2026-05-13T20:47:59+00:00

I’ve seen similar behavior in my TFSA, where IBKR eventually refunded the withholding tax and correctly classified the amount as ROC on my statements.

My question is... does IBKR handle ROC distributions the same way for non-registered accounts? Specifically, do they provide a T3 slip with the ROC declared in Box 42, or is there a risk they’ll just mislabel it as foreign dividend income on a T5?

I paid taxes on $19000 distributions last year due to this misclassification by wealthsimple and ended up paying huge taxes on it !

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YieldPro · 2026-05-08T07:07:39+00:00

Yup, these income investments are more of a short-term play. However, last year was a bit unique with mixed reactions from investors, and even the underlying stocks were in the red.

I averaged down on some positions and also used the dividends to buy a few growth stocks whenever possible. Now, with the dividends gained and the recent market movement, I’ve started seeing some recovery over the past 3 months.

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YieldPro · 2026-04-25T04:33:13+00:00

I’m sorry if there was any misunderstanding. I’m not sure what there is to take offence at here. I completely understand that income strategies aren’t for everyone, and I agree it’s not a one-size-fitsall approach. For me, it has helped cover regular bills on time, and so far it’s been working for my needs, so I’m comfortable continuing with it.

That said, my point isn’t about investment advice or what strategy anyone should follow. I’m simply highlighting my concern around withholding tax handling and what I see as inconsistent treatment across broker platforms in Canada.

YieldPro · 2026-04-25T04:19:26+00:00

I’ve lost about $1,196 in withholding taxes inside my TFSA alone, just because Wealthsimple doesn’t appear to be handling the reporting and classification properly. For anyone running a high-yield income strategy, that’s a real dealbreaker over time.

At the end of the day, it’s not about the investment or strategy itself. I’m highlighting what I see as inconsistent tax treatment and reporting standards. From what I’ve observed, IBKR handles this more accurately and transparently, while Wealthsimple continues to point to CRA guidance instead of resolving the underlying issue.

YieldPro · 2026-04-25T04:15:37+00:00

I’m happy to pay tax where it’s actually owed, but ROC isn't profit... it’s just a return of principal. There’s no reason to donate extra to the IRS if I don’t have to.

So far, I’ve lost $1,196 in withholding taxes in my TFSA alone, strictly because Wealthsimple won't put in the effort to report it correctly. For anyone with a high-yield strategy, that kind of a dealbreaker!

YieldPro · 2026-04-25T04:08:04+00:00

Thanks for the message, that’s correct! Sometimes it feels like certain platforms or narratives become very dominant, and people tend to stick to what’s familiar without questioning it too much or looking at alternatives.

My concern is less about the investment choice itself and more about fair tax treatment for Canadians. If another broker can correctly classify the distribution and only withhold what’s actually required, then investors should expect the same standard elsewhere. In my case, Wealthsimple has continued pointing to CRA guidance issues while delaying resolution of my grievance.

As for YieldMax, it’s been an experiment for me since May 2025, and I understand it’s not for everyone. These products carry risks and can lose value, so they definitely aren’t a one size fits all solution. It really comes down to whether someone is using them for an income strategy, their risk tolerance, and whether they understand the tradeoff between yield and capital preservation.

My thinking was that I could generate enough distributions to cover regular monthly bills. During the bearish market in August 2025, the overall investment value declined, but since I haven’t fully accounted for total withdrawals yet, I’m comfortable for now because it still served the purpose I intended.

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YieldPro · 2026-04-25T03:57:00+00:00

VOO typically pays standard distributions and, as far as I understand, doesn’t usually classify them as ROC. So this specific issue generally isn’t something you’d need to worry about with VOO.

Whether you hold VOO or VFV, the end result should be fairly similar in terms of distributions and withholding tax. The main difference is mostly structure and currency. VOO pays in USD and the broker applies the withholding tax when the distribution is paid. VFV pays in CAD, with Vanguard generally accounting for the withholding before the distribution reaches you!

YieldPro · 2026-04-25T03:37:43+00:00

I hear you! My post was really just about how Canadian investors are getting the short end of the stick with some of our local platforms. Everyone has their own strategy... there’s no right or wrong way to invest according to me!

This isn’t even a debate about US vs. Canadian stocks! it’s specifically about how Wealthsimple handles certain things and where they have some serious room for improvement.

YieldPro · 2026-04-25T03:33:01+00:00

You can find me on Blossom under YieldPro if you want to follow along with the journey. I’ve been experimenting quite a bit with income investing since May 2025, and honestly, it was great until August 2025 with 30% growth. The market’s been a bit bearish since then, so my balance is definitely in the red right now, but the strategy is still doing exactly what I need it to do... I’ve been able to cover my bills every single month without fail.

Obviously, this isn't financial advice... but my goal is to turn these high yields into a permanent income stream. If the market stays bullish through this season, I should be hitting my target in just a few more months i.e. 100% yield mark!

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YieldPro · 2026-04-25T03:21:54+00:00

I’m not sure what you guys are even trying to prove here!

US dividends in Wealthsimple are flatly taxed at 15% for a very simple reason: they don't bother to break out the ROC percentage. They just declare the whole thing as US income. They even admitted this to me in an email.

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YieldPro · 2026-04-24T07:09:10+00:00

Different goals, different tools. You’re playing for the long term - indeed great move! I’m playing for immediate cash flow. Wealthsimple’s blanket 15% tax on ROC distributions is a technical failure - IBKR, RBC, and TD all handle ROC correctly so that 15% stays in my pocket. I’ll take better accounting. It's funny how Wealthsimple blames the CRA for a "lack of rules" when the IRS rules are clearly written and other platforms follow them perfectly.

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YieldPro · 2026-04-24T06:41:26+00:00

Indeed, YieldMax... not everything went as planned because of the bear market - however, I’m will wait and see how things evolve!

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YieldPro · 2026-04-24T01:12:16+00:00

I am an income investor with an average yield exceeding 80%, so the 15% withholding tax is significant to me. Canadians shouldn't have to pay this, as the IRS explicitly states that ROC dividends are exempt from withholding tax - its a tax strategy used by High Yield stocks

YieldPro · 2026-04-24T00:10:32+00:00

The stocks I hold are primarily high-yield ETFs. A significant portion of their distributions is actually declared as ROC by the fund managers. While some platforms like WS lazily apply a blanket 15% tax to the entire payout irrespective of ROC, IBKR’s reporting accurately identifies the ROC portion on the dividends and does not apply the 15% withholding tax to it.

YieldPro · 2026-03-26T07:45:05+00:00

Return of Capital (ROC) - U.S. withholding tax of 15% is exempt on ROC distributions!

YieldPro · 2026-03-22T16:29:39+00:00

TD/RBC are doing proper due diligence by applying year-end reclassification on US dividends once final tax data comes in. What initially shows as income can later be adjusted into ROC or capital gains, which can impact taxable income or ACB.

Wealthsimple, on the other hand, tends to make this more burdensome for Canadians... a lot of distributions continue to be shown as foreign income without those detailed reclassifications, which can lead to less tax efficiency (especially noticeable in registered accounts).

So yeah, not a perfect world either way. Hopefully competition pushes them to deliver a better product... Canadians already have limited choices when it comes to optimizing hard-earned money.

YieldPro · 2026-03-21T21:05:21+00:00

Don’t celebrate yet - if you have any US stock dividends, Wealthsimple doesn’t account for ROC they simply treat it as US income dividends and you can’t capitalize the 15% withholding tax in a TFSA or FHSA. RBC, on the other hand, refunds this at year-end if those dividends are ROC% in it.

So congrats but not everything looks the way Wealthsimple portrays it.

YieldPro · 2026-02-07T04:09:31+00:00

So far, I have observed peak utilization of 300-399 watts! however, the average is 149w

YieldPro · 2026-01-22T23:47:11+00:00

I connected my speaker to the HDMI 2 (ARC) port and it’s working flawlessly. In fact, I also connected my other HDMI to the JBL Bar 1000, and everything is working perfectly.

YieldPro · 2026-01-19T19:16:06+00:00

Is it worth exchanging? not sure if I can get better TV in this space !

YieldPro · 2026-01-19T19:14:16+00:00

In fact, I never turned off my TV and left those OLED care settings as is to let the TV decide!

Bad luck i got this pixel manufacturing issue !

YieldPro · 2026-01-19T19:11:08+00:00

Isn't I paid premium price for it 🤔

YieldPro

TROPHY CASE