Taxes on exchange traded funds (ETFs) depend on many factors, including:
- Whether you hold them in a registered or non-registered account;
- The registered account you use (TFSA, RRSP, RRIF, etc.);
- Whether they are Canadian or foreign ETFs.
With ETFs, you’ll generally pay tax on:
- any capital gains you make from an ETF when you sell it, and
- any distributions you receive from the ETF.
You should not be affected by distributions that occurred before you purchased the ETF. However, before you make a purchase, speak to your registered financial advisor or tax professional to learn how taxes apply in your situation – based on where you are holding the ETF and the type of ETF you purchase. Learn more about how ETFs work.