Tackle tax on bonds

Investors might be surprised with how complex the taxation situation in Canada can get

Matthew Elder 22 August, 2019 | 1:11AM

Man writing on a piece of paper

Bond investors benefit from a simple business deal: loan some money and collect interest until a defined date. But the reality can often be more complicated - not all investors hold still until maturity - and it's in your best interest to consider the taxation implications.

Buying a bond on the secondary market (after it has been issued) or selling it early (prior to the maturity date) affects a bond’s price. This complicates the tax situation because it will likely create a capital gain or loss when it is sold. That is not the case when a bond is held from its issue date until maturity, because you purchase and sell the bond at the same price (its face, or par, value).

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Matthew Elder  

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