How to Buy US Stocks in Canada: Methods, Currency Costs and Account Choice

Canadian investors can buy almost any US-listed stock or ETF, and the trade itself is often free. What costs money is turning Canadian dollars into US dollars, and choosing the wrong account for US dividends. This guide covers the ways to get US exposure, what each costs at the main brokers, which account to hold US investments in and what to report at tax time. For a full comparison of brokers, see the online broker comparison.

Three ways to invest in US stocks

1. A Canadian-listed ETF that holds US stocks

Funds such as iShares XUU or Vanguard VUN (the whole US market) and Vanguard VFV or iShares XUS (the S&P 500) trade on the Toronto Stock Exchange in Canadian dollars. You pay no currency conversion, there is no US-dollar balance to track, and the fund handles the underlying US holdings. The trade-off is a slightly higher management fee than some US-listed equivalents, and US withholding tax on dividends is paid inside the fund, where an RRSP or TFSA cannot recover it. US-listed vs Canadian-listed ETFs compares the tax drag in detail.

2. Buying US-listed securities with the broker’s conversion

Place the order from a CAD account and the broker converts automatically, or convert into a USD account first. This gives access to any individual US company and to US-listed ETFs, but each conversion carries the broker’s fee.

3. Converting cheaply first, then buying in US dollars

Norbert’s Gambit converts a large amount at close to the market exchange rate: buy an interlisted security in Canadian dollars, have the broker journal it to its US-dollar listing, then sell it for US dollars. It takes a few days and one or two extra steps, and the broker must support journaling. At Questrade, an online journaling request costs $9.95.

What conversion costs at each broker

Example: $50,000 into a US-listed S&P 500 ETF

• Converted at 1.5%: $750 in conversion costs, before any conversion back to Canadian dollars later.
• Converted at Interactive Brokers: 0.20 basis points of $50,000 works out to under the US$2.00 minimum, so the minimum applies.
• Canadian-listed S&P 500 ETF instead: no conversion; the cost is the fund’s slightly higher management fee each year.

For a one-time large purchase held for many years, a low-cost conversion followed by a US-listed ETF can come out ahead. For regular smaller purchases, a Canadian-listed ETF avoids the conversion question entirely.

Which account should hold US investments

US withholding tax on dividends depends on the account:

That is why US dividend payers are often held in an RRSP. The rules and edge cases are covered in US withholding tax in an RRSP, US withholding tax in a TFSA and the broader asset location guide. Whether a USD balance can be held inside your TFSA or RRSP varies by broker, which matters if you want to avoid converting dividends back to Canadian dollars.

Tax reporting for US investments in a non-registered account

Inside an RRSP or TFSA, US income is not reported each year. In a non-registered account:

• Dividends are reported in Canadian dollars from the T5 slip your broker issues, and the US tax withheld is claimed through the foreign tax credit.
• Capital gains are calculated in Canadian dollars, converting both the purchase and the sale at the exchange rate on each date. How to calculate adjusted cost base covers the method, including repeated purchases.
• Form T1135 is required if the total cost of your foreign property, including US stocks held outside registered accounts, was more than $100,000 at any time in the year. The T1135 guide explains the thresholds and penalties.

Large US holdings can also raise US estate tax questions for high-net-worth investors; the international taxes hub covers cross-border tax topics.

Frequently compared questions

Can I buy fractional shares of US stocks? Some Canadian brokers offer fractional trading on selected US stocks and ETFs, and others require whole shares. Check the broker’s own list of eligible securities.

Do exchange-rate moves affect my returns? Yes. A US stock’s return in Canadian dollars includes the change in the CAD/USD rate over the holding period, whichever way you buy it. How currency moves affect investments explains the effect, and hedged vs unhedged ETFs covers funds that remove it.