1. Don't take yield at face value – When it comes to ETFs, not all distributions are created equal. ETFs may make distributions consisting of very different types of income including Canadian dividends, interest, foreign income, capital gains as well as returns of capital (ROC) to unitholders. These various forms of income within distributions can be taxed very differently with some being more tax efficient than others, and is a factor that ultimately needs to be considered when evaluating an ETF to invest in.
2. Structure matters - Generally speaking, ETFs are usually more tax efficient than actively managed mutual funds, largely because there is less turnover within the portfolio since units are bought and sold on the exchange which may not impact the cash flows in the ETF portfolio. This lower turnover can help minimize capital gains distributions resulting in improved long-term after-tax efficiency and performance. Moreover, there is typically a reduced potential for tax distributions to investors because the selling activity by investors on the exchange doesn’t always result in fund redemptions like with mutual funds.
3. Canadian vs U.S. ETFs – When it comes to Canadian's investing in either Canadian or U.S. listed ETFs there are two key words investors need to consider – withholding tax. Most countries levy a tax on dividends paid to foreign investors. For example, the U.S. government levies a 15% withholding tax on distributions paid to taxable Canadian investors. And that’s not all. There are often times multiple levels of withholding taxes charged, depending on the assets held in the ETFs. A first 15% withholding tax may first be applied by the countries where the stocks in the portfolios are listed, and then depending on where the ETF is actually listed, there could be an additional 15% withholding tax. These withholding taxes tend to increase the cost of the investment and reduces net returns when compared to direct exposure through Canadian-listed ETFs. Ultimately, for a Canadian investor, it is usually better to purchase a Canadian-listed ETF.
4. Tax loss selling – Tax-loss selling is the act of selling a security at a loss (capital loss) and using the loss to help offset realized gains (capital gains) incurred from selling other securities in a non-registered account. The losses can be used to help offset capital gains realized elsewhere in a portfolio. There’s a challenge with this strategy, however, since-realizing a capital loss could mean selling a security that plays an important role in your portfolio. ETFs can be used to maintain exposure to a particular asset class while allowing for claimable capital losses.
5. Phantom distributions - ETF distributions are often paid in cash but may also be reinvested within the fund. Reinvested distributions are provided to ETF investors in the form of additional units of the fund, however, the investor will still be taxed, and an adjustment will be made to the adjusted cost base (ACB). Investors would receive a T3 or T5 tax slip which would include phantom distributions but there are various nuances from a reporting standpoint (beyond the scope of this blog) which can impact taxes upon the sale of the investment. This is why investors should be diligent in tracking ACB values when their ETF distributions are reinvested.

For more information on the taxes and distributions associated with a specific ETF, please refer to the ETF’s prospectus, your financial statements, or the Annual Financial Report for the ETF. It is also recommended that you contact a tax professional for additional information about taxes. You can also visit our Tax Resource Centre for more information. To view our entire ETF line-up, visit us at td.com/etfs and download our TD ETF Product Guide.

本文所含信息由道明资产管理有限公司提供，仅供参考。信息出自我们认为可靠的来源。本信息并未提供财务、法律、税务或投资建议。具体的投资、税款或交易策略应根据每位投资者的目标和风险承受能力加以评估。

进行交易所买卖基金投资可能需要负担相关佣金、管理费以及支出。 Please read the prospectus and ETF Facts before investing. ETFs are not guaranteed, their values change frequently, and past performance may not be repeated.交易所买卖基金单位在证券交易所按市场价格进行买卖，因此收益会因经纪人佣金的支付而减少。

本文档中的部分陈述可能包含预测性的前瞻性陈述（“FLS”），其中包含“预计”、“预期”、“打算”、“认为”、“估计”和类似的前瞻性表述或其否定形式。前瞻性陈述基于当前对未来普遍的经济、政治、相关市场因素（例如利率和汇率、股票和资本市场）以及普遍经营环境的预计和预测，并假定不发生税法或其他法律或政府管制方面的任何变动或灾难事件。对于未来事件的预计和预测本身受无法预见的风险和不确定性的影响。此等预计和预测可能在未来并不准确。前瞻性陈述并非对未来表现的保证。实际发生的事件可能与前瞻性陈述明示或暗示的事件存在实质差异。包括上文所述各项因素在内的多个重要因素均可能造成这种背离。您不应在任何程度上依赖于前瞻性陈述。

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