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Tax on interests between regular and brokerage accounts
November 1, 2023
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davidgeorge
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NorthernRaven
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AltaRed
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Norman1
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RetirEd said
To qualify as capital gain, there must be risk in investment. …
Risk is not required for capital gains.
There is no risk in buying a Government of Canada 0.75% bond that matures 2024/02/01 at 99.087% of face value and holding it to maturity.
Yield to maturity will be 4.691% per annum. About 0.75%/0.9908 = 0.757% of that 4.691% will be interest for tax purposes. The remaining 3.9% of the 4.691% return will be a capital gain that comes from paying 99.087¢ for each $1 of bond principal and receiving $1 on maturity.
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