# Taxation of Strip Bonds in Non Registered Accounts



## bariutt (Feb 2, 2013)

I am aware of how to compute interest on a strip bond. However I regularly purchase them in my registered accounts where I do not declare this interest.

I am now considering opening a new non registered account in which I would like to purchase strip bonds.

My question is how does the bank report the interest both to me and to the CRA. Will I or the CRA receive any type of T3 from the bank? 

I know that it is my obligation to declare the interest annually. I just want to gain a better understanding of the paperwork involved.


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## OnlyMyOpinion (Sep 1, 2013)

Bariutt,
We've owned multiple strip bonds in our non-reg acc for years and tracked and reported the accrued (or deemed) interest on them each year. It is reported on Schedule 4 as 'II. Interest and other investment income' which shows up on line 121 of your tax return.
Now last year (2015 tax year) for the first time, TD Direct Investing began tracking and reporting this accrued interest in our account on a T5. I suspect this is a new CRA requirement and that all institutions are reporting it now. We'll continue to track it ourselves and compare it with TDDI's value but we'll ensure that we report the $ value they provide on the T5 (Box 13 - Interest from Canadian sources).


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## Eclectic12 (Oct 20, 2010)

While the OP is waiting to see if the broker does or does not use provide a T5, here is some info.
http://www.taxtips.ca/personaltax/investing/taxtreatment/stripbonds.htm

Cheers


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## james4beach (Nov 15, 2012)

Wow, TDDI will calculate and report the (virtual) accrued interest on a strip bond? That's news to me.

Years ago when I held lots of non-reg strip bonds, I had to do my own calculations and attach them to Schedule 4.

It wasn't worth the effort. Just put the money in GICs, which have beautifully simple tax reporting.


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## AltaRed (Jun 8, 2009)

It must be a regulatory thing since I believe the majors at least report accrued interest. It may be that CRA was getting pissed at investors f*cking this up... OR this is part of the CRA move to post 'all reported' income on everyone's MyAccount.


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