What to Watch for When Transferring a Stock to the US Dollar Side of an InvestorLine Account

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First I set up a US dollar ledger or journal for my InvestorLine RRSP account. Then I transferred some shares of TD that I already owned from the Canadian dollar side of the account to the US dollar side. I forgot to watch out for one detail before I did this transfer though.

Receiving Dividend Payments in US Dollars within a BMO InvestorLine RRSP US Dollar Sub Account

I asked a BMO InvestorLine agent to move 100 TD shares from my Canadian dollar RRSP account to my US dollar sub-account. They journaled the shares over, as requested, on July 11.

I felt rather smug about that because they pay a dividend on July 31 and I wanted to see how that would work. For instance, what exchange rate and fee would I have to pay to receive the dividend in US dollars?

Watch Your Dividend Dates Before Requesting a CAD to USD Transfer

Unfortunately, I forgot the dividend PAYMENT date is not the important one. It’s the dividend RECORD date I should have tried to beat.

TD declared the July 31 dividend to be payable to shareholders on record on July 9. On July 9, I still held the shares in the Canadian dollar side of my account.

What Happens to a Dividend Payment In This Situation?

I don’t actually know how this will play out. I guess on July 31 I will find out. Actually it will be August 1, as InvestorLine does not pay dividends till one day later, then backdates the transaction. So I will report my findings in August.

I still have TD shares in my Canadian dollar account. I also now have TD shares in my US dollar account. The dividend could

  • Be paid for all of the TD shares in CAD to the cash account in the Canadian ledger; or
  • Be paid for the Canadian-held TD shares in CAD to the cash account in the Canadian ledger, and be paid for the US-held TD shares in CAD to the cash account in the US ledger but be converted to USD after applying an exchange rate and a foreign currency exchange fee.

I already had been puzzled about exactly what they would do for the dividend payable on the shares held in the US ledger:

  • would they pay the dividend in CAD and only apply the exchange rate; or
  • would they pay the dividend in CAD and apply both the exchange rate and a foreign currency exchange fee; or
  • would they pay the dividend is USD at an exchange rate set by TD.

That puzzle will not be solved until Hallowe’en!

Why Transfer TD Anyway?

Some of you may be wondering why I moved TD in the first place. It’s just that I bought it during the recent dip and I’ll be selling it soon to crystallize the capital gain. Then I’ll want to re-invest the money, preferably in a US stock. This was an easy way to move the value to the US side to have it ready to sell when I find something I want to buy.

The Moral of the Story

Be smarter than me. (I know that’s not much of a challenge!)

If you are transferring shares from your Canadian Dollar account to your US Dollar account, try to do it before the date of record. And I guess if you’re transferring them the other way, also keep an eye on the Record date.

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1 thought on “What to Watch for When Transferring a Stock to the US Dollar Side of an InvestorLine Account”

  1. At BMOIL, you don’t need to do the transfer of CDN interlisted stocks before you want to sell them on a US exchange. When you sell, just put the order in under the US market and ask that the transaction settle in USD. BMO will automatically transfer the stock to cover this trade one day after the settlement date (or you can ask them to transfer it sooner).

    Also, I wouldn’t transfer Canadian dividend stocks to the US side of my account, unless they pay their dividends in USD. I’m pretty sure BMO will take their hefty FX fee to convert your dividends from CDN to USD.

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