How to Buy US Stocks in Canada

Buying US stocks from Canada is straightforward — but doing it efficiently requires understanding currency conversion, withholding taxes, and account type considerations. This guide covers everything you need to know to access US markets while minimizing costs.

Step 1: Open the Right Account

You need a brokerage that supports US trading. Most major Canadian online brokerages do:

Step 2: Understand Currency Conversion

When you buy US-listed stocks or ETFs, you need US dollars. Most Canadian brokerages charge 1.5–2% to convert CAD to USD. On a $100 transaction, that's $150–$200 lost in conversion fees — before you even own the stock.

The Standard Route (Easy but Expensive)

Deposit Canadian dollars, place a USD order, the brokerage auto-converts at their spread. Convenient but costs 1.5–2% every time you buy or sell.

Norbert's Gambit (More Effort, Lower Cost)

A technique that converts CAD to USD for roughly 0.2–0.5% total cost instead of 1.5–2%. It involves buying a Canadian-listed ETF that also trades in USD (like DLR and DLR.U), then journaling shares across currency accounts. Takes 2–3 business days. Saves significant money on large transactions. Full Norbert's Gambit guide.

Step 3: Choose What to Buy

For most Canadian investors, the simplest and most effective approach to US equity exposure is buying a Canadian-listed US equity ETF (like VFV, ZSP, or XUU) in Canadian dollars. This avoids currency conversion entirely while giving you full US market exposure.

When does it make sense to buy US-listed securities directly?

• In an RRSP, where US dividends are exempt from withholding tax (saving 15%)
• When you want specific US stocks not available through Canadian ETFs
• When Norbert's Gambit makes the conversion cost-effective for larger sums

Step 4: Withholding Tax Considerations

US companies must withhold 15% tax on dividends paid to Canadians. This applies regardless of whether you hold US stocks or US-listed ETFs. The account where you hold these investments determines whether you can recover this tax:

• RRSP: No withholding tax on US dividends (Canada-US tax treaty)
• TFSA: 15% withholding tax, not recoverable — avoid holding US dividend stocks here
• Taxable account: 15% withholding tax, claimable as a foreign tax credit on your return

Buying Individual US Stocks vs ETFs

Most Canadians who want US exposure are better served by a US equity ETF than by picking individual US stocks. Here's why:

• Diversification: An ETF like VFV holds 500 companies vs your handful of picks
• Research burden: Analyzing US individual companies requires significant time and expertise
• Currency complexity: Each individual US stock purchase requires currency conversion
• Tax reporting: Individual US stocks create more complex T-slip reporting

If you do want individual US stocks, Questrade and Wealthsimple Trade both offer access. Questrade charges $4.95–$9.95 per trade plus the FX conversion. Wealthsimple charges 1.5% currency conversion on US trades automatically.

US Stocks in a Taxable Account

In a taxable Canadian account, US stock gains are subject to Canadian capital gains tax (50% of the gain is added to income, taxed at your marginal rate). US dividends are taxed as regular income but receive a 15% foreign tax credit for the withholding already paid. Keep detailed records of the purchase price in Canadian dollars (adjusted cost base) for each US stock you hold.