I am wondering if there is a more tax efficient way to deal with with foreign dividends taxes here in Canada. As many of you know, foreign dividends are taxed as ordinary income here in Canada, since the Canadian govt does not tax foreign corporations.
We have quite a bit of international equity. Our portfolio in the non-registered account currently consists of roughly 30% in XEF and 30% in VUN, VUS (in cdn dollars), VTI, and some other American stocks (in us dollars). The annual foreign dividends received in this set-up approaches 30k cad and are taxed as ordinary income. I am aware there is an etf with a swap structure (HXS) that could replace VUN but I haven't found the equivalent for XEF and VUS. This 30k "ordinary income" adds quite a bit to our tax bill considering we also have income via canadian dividends and capital gains through re-balancing.
Does anyone have any idea on how to reduce the taxes on the foreign dividends in a non-registered account? I thought about making a private swap deal with banks and/or insurance companies but the odds of that happening is probably 0.
We didn't care about the foreign dividends taxes while we were both working, with us retired however, I feel it is important to deal with this and lower our tax bills.
Thanks.