Peculiar_Investor wrote:You might also want to check out http://www.finiki.org/index.php?title=C ... onal_Bonds
The essential advice from almost all sources is DON'T hold Strips in a taxable account. Also the Hank Cunningham book is well worth the read as it is specific to the Canadian market.
ColdCanuck wrote:In other words are there significant negative tax implications of strips over other FI instruments held in non-registered plans?
Shakespeare wrote:Don't hold strips in non-registered plans because you will be required to pay tax on income that is imputed but not received. If you must hold fixed income in non-registered plans, hold normal (unstripped) bonds or GICs.
Also, pay attention to whether the bond is in premium, since you will only be able to use 1/2 of a capital loss.
See this post. But only unstripped bonds trade at a premium; strips always trade at a discount.I understand your second point, but is not half a loss better than no loss (sorry couldn't resist ), which is what would happen to a loss in a registered plan. I guess the take home message is not to buy strips trading at a premium, which in turn may limit the selection.
Shakespeare wrote: But only unstripped bonds trade at a premium; strips always trade at a discount.
Shakespeare wrote: It is usually up to the investor to compute imputed interest on a strip held in a non-registered account.
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