Will Changes To Horizon’s Swap-Based ETFs Affect Canadian Expats?

In my book, Millionaire Expat, I mentioned Horizon’s swap-based ETFs for Canadian expats.

I said they might be the most tax-free products available, anywhere (pages 276-278).

In the Kindle edition, I updated the offerings to include an international stock index (HXDM). For a Canadian expat overseas, they can offer no-capital gains tax and no dividend taxes to pay. They are backed by the National Bank of Canada.

And unlike physical ETFs, they don’t have tracking error. I own a couple of them in my personal portfolio. Lately, however, their tax-free status has been threatened. Horizons, though, has found a way around this.

They’re going to be slightly restructured, but they should continue to offer the same tax-free status to many Canadian expatriates abroad. Dan Bortolotti wrote a great column describing these changes.

In the column, he said there’s some action to be taken for current unit holders.

But that action would only apply to Canadian residents. They risk paying capital gains if they don’t fill out some forms. If your account is in a tax-free jurisdiction, that won’t apply to you.

 

Here’s the link to Dan’s excellent report.




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Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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