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.
To the first point, imputed interest on the strip, would be no different than a compounding GIC, right . Prepaying the tax may be advantageous in my current position as I will have a very low MTR (early retirement, sufficient non-taxed income to live), for the next few years, rising significantly as OAS and mandated LIF payments kick in. However I will do the numbers very carefully before I head down this path.
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.
Thanks to PI and Shakes for the responses so far, does anyone have an answer to the original question