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Published by: Bob Ca on Sep 07, 2010
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The Canadian Tax System (continued) Types of investments: bonds (pg 277-318 lm) Definition Characteristics of All Bonds Face

Value Length of Life/Date of Final Maturity Coupon Rate The Bond Indenture The Bond Trustee The Order of Liquidation Types of Bonds Secured Bonds Unsecured Bonds (Debentures) Reading Bond Quotations in the Financial Press Calculating Rough Bond Yields: Examples


Taxation of Investment Returns - The Canadian Tax System


( Marginal Tax Rate continued) o Combined marginal tax rate = fed tax rate + prov tax rate + prov surtax Types of investments o interest, dividends, capital gains o each taxed differently o therefore investment returns compared on after tax basis o Tax Rules  Interest 100% taxable  Dividends 45% gross-up, 19% federal, 7.4% provincial tax credit

41% Therefore. .41%) y Dividends 22.98% y Capital Gains 23.20% y Interest 46.41%. after-tax returns highest for dividends then capital gains then interest if you are in the highest marginal tax bracket of 46.    Capital Gains 50% of net capital gains are taxable (net capital gains = total capital gains total capital loses) Effective tax rate for an investor in the highest marginal tax bracket (46.

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