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Absolutely!

The hedge to CAD$ does not affect the distributions. The holdings payout in USD - so you'll get taxed on them as USD payouts.

Outside the RRSP, this means they are fully taxed at your marginal rate.
Inside the RRSP, they won't be taxed at all.
 

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Slightly off topic, but Vanguard ETFs are actually a share class of the corresponding Vanguard Index Mutual Fund. They *can* carry a tax liability of the mutual fund inside the performance of the ETF. Structurally that is the case, but it has yet to be a problem.

An ancillary benefit (for americans) is that if you owned the index mutual fund from vanguard, you can convert to the ETF structure tax-free, since it is just switching from a share class of the fund to another share class of the same fund.

Just sayin...
 
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