Why Where Your ETF Lives Matters More Than You Think

Most investors spend their time deciding what to invest in. S&P 500 or global? Growth or value? Active or passive? But there’s a quieter question—one that rarely gets asked: Where does your investment actually live? Because when it comes to ETFs, location isn’t just geography… it’s taxation. And depending on how your portfolio is structured, that tax can either be minimized—or quietly compound against you for decades.

What Is an ETF (And Why Most Investors Use Them)?

An ETF (Exchange-Traded Fund) is a basket of investments that trades on a stock exchange—just like a single stock. Instead of buying one company, you’re buying hundreds or even thousands at once. For example, an ETF tracking the S&P 500 gives you exposure to companies like Apple Inc., Microsoft Corporation, and Amazon.com Inc.—all in a single purchase. Some of the benefits of ETFs are broad diversification, low cost, and simple & scalable exposure to global markets. But one issue is that two ETFs can look identical on the surface but can produce different outcomes, simply because of how they are structured or where they are domiciled.

The Structural Difference: U.S. vs Canadian-Domiciled ETFs

A U.S.-domiciled ETF (like VTI or VOO) is listed in the U.S. and holds underlying US securities directly. A Canadian-domiciled ETF (like XUU or VFV) is listed in Canada and provides U.S. exposure inside a Canadian fund structure. They may track the same index and they may hold the same companies but the tax treatment is not the same—especially depending on which type of account you use.

The Tax You Don’t See: U.S. Withholding Tax

When U.S. companies pay dividends to Canadian investors, the U.S. government applies a 15% withholding tax. This is where account type starts to matter.

TFSA: Tax-Free… But Not Fully Efficient

The Tax-Free Savings Account is one of the most powerful tools Canadians have but when it comes to U.S. investments, there’s a limitation. The issue is that, for Canadians, U.S. dividends are subject to 15% withholding tax and this taxation within a TFSA is not recoverable. This means that if your ETF generates $1,000 in dividends, you lose $150 permanently.

RRSP: The Cross-Border Sweet Spot

The Registered Retirement Savings Plan is where cross-border planning starts to work in your favor because of the Canada–U.S. tax treaty, the IRS recognizes RRSPs as retirement accounts. The result is that there are no U.S. withholding tax on dividends from U.S. domiciled ETFs, which results in you receiving the entire dividend. So, if your ETF generates $1,000 in dividends → you keep the full $1,000. It is very important to note that this benefit only applies to U.S.-domiciled ETFs. If you use a Canadian domiciled ETF that provides U.S. exposure, the withholding tax is applied inside the fund—and you don’t see it.

Non-Registered Accounts: Not Perfect, But Recoverable

A non-registered account doesn’t avoid withholding tax upfront—but it does give you a mechanism to recover it. As a Canadian, you still are required to pay the 15% withholding tax but you receive a foreign tax credit when you file your Canadian tax return. This results in your avoiding double taxation but you still have to pay Canadian income tax on the income that you earn.

So… What Should You Actually Do?

This isn’t about chasing perfection. It’s about being understanding your investments and being intentional with placement. Use your non-registered account with awareness of tax reporting and structure. Use your RRSP for U.S.-domiciled ETFs when appropriate. Use your TFSA for Canadian equities or growth-focused investments with lower dividend yield

Final Thought

Most investors don’t fall short because they chose the wrong ETF. They fall short because of unnecessary tax drag, reactive decisions during volatility, or a lack of structure behind their portfolio. This is one of the rare areas where a small adjustment can create a permanent tailwind for your NET returns.

Take 15 minutes this week and ask:

Where are my U.S. investments currently held?
Am I unintentionally losing withholding tax in my TFSA?
Is my RRSP positioned to take advantage of the tax treaty?

You don’t need to overhaul everything overnight but tightening the structure—even slightly—can improve outcomes for decades to come.

Request an Introductory Conversation

Jesse Ogloff, B.Comm, PFP, CFP, CIM, CFDS

Associate Wealth Advisor / Associate Portfolio Manager

CIBC Wood Gundy

[Life Expectancy vs. Health Expectancy]

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When most people plan for retirement, they focus on one question:

How long will my money need to last?

It’s the right question. But there’s a second one that often matters just as much — and gets far less attention.

How long will I be healthy enough to enjoy it?

These two questions point to two different clocks. And understanding the gap between them is one of the most important things you can do when planning for retirement.

The Number Most Plans Miss

In Canada, average life expectancy sits around 82 years and most financial plans will push the life expectancy out even further until at least 90 years old. But according to global health data, the average Canadian lives in good health only until around age 69 or 70.

That’s a gap of more than a decade and up to two decades.

Those later years aren’t without meaning, many people find them deeply fulfilling. But they tend to look different. Travel becomes harder. Physical hobbies get modified or set aside. Energy shifts. The shape of a good day changes.

None of that is a reason for pessimism. It’s simply useful information when building a plan.

The Climb

Think about what it takes to summit a mountain.

The ascent is demanding but exhilarating. You’re moving, building fitness, gaining elevation. Your legs are strong. Your lungs are full. There’s a rhythm to it that feels good, even when it’s hard. The journey up is part of the reward.

The higher you climb, the more the views open up. And as you near the summit, your body is working at its peak. Your preparation is meeting the moment.

The summit itself represents something worth pausing for. It’s where health, capability, and freedom fully align and this window of time is when you can do the things that require all three at once. High-altitude treks. Extended travel. Physically demanding adventures. The experiences that simply aren’t available lower on the mountain.

A wise climber knows this window is finite. They don’t rush past the summit to begin the descent. They take in the view. They use the moment for what it was designed for.

The descent is different. It still requires care, attention, and in some ways it demands even more discipline than the climb. But it’s less strenuous. The body has done its hardest work. The route becomes more about stability and steady footing than peak exertion.

And here’s the part that matters most for planning:

You need enough supplies for the entire journey — the ascent, the summit, and the full descent home.

Running short halfway down isn’t a minor inconvenience. It changes everything.

What This Looks Like in Retirement

Your working years are the ascent. You’re building financially, professionally, personally. It takes effort and discipline, but there’s momentum and energy in it.

The early years of retirement are the summit phase. Health, freedom, and financial security overlap. This is when most people travel, pursue the experiences they deferred, and actually live the life they spent decades building toward. Spending tends to be highest during these years.

The later years of retirement are the descent. Life becomes more local. Routines simplify. Physical goals shift. Spending on active experiences naturally declines, while spending on care and support may rise and you may even want to start to look at gifting some assets to the next generation.

Research consistently confirms this pattern. People spend the most in the early years of retirement, when they feel the best. The challenge is that emotionally, many people do the opposite. They hold back at the summit, worried about conserving supplies, and the window quietly closes.

The Spending Paradox

Here’s something I see regularly in my practice.

Someone spends 30 or 40 years building wealth with real discipline. They reach retirement financially secure. And then, almost immediately, they struggle to spend.

The question shifts from “What do I want to experience while I can?” to “What if I run out?”

So the trip gets delayed. The adventure gets postponed. The plan becomes maybe next year.

The irony is hard to miss. The summit years arrive but sometimes without the health or mobility to use them. The supplies are full. The window has passed.

Two Questions a Good Plan Should Answer

When I work through retirement planning with clients, I find it useful to separate two distinct concerns.

The first is longevity risk: How do I make sure my money lasts for the entire journey, through the ascent, summit, and full descent?

The second is timing risk: Am I using my resources intentionally during the years I’m most capable of enjoying them?

A plan that only answers the first question leaves something important unaddressed. A plan that answers both gives you the structure to spend confidently at the summit because you’ve already accounted for the descent.

The Goal Is a Well-Planned Journey

A wise mountaineer doesn’t abandon discipline at the summit. They still ration carefully. They still plan the descent. But they also know that standing at the top and actually experiencing what the climb was for was always part of the plan.

Most people say they want to live a long life. What they really mean is a long and well-lived life.

Planning for both your lifespan and your healthspan is making sure you have enough for the whole journey, while using the summit for what it was meant for and is one of the most meaningful things a retirement plan can do.