For a high-net-worth Canadian investor in a top marginal tax bracket, which investment strategy is generally considered most tax-efficient?

Question: For a high-net-worth Canadian investor in a top marginal tax bracket, which investment strategy is generally considered most tax-efficient?

Answer options:

• Maximizing investments in interest-bearing accounts outside of registered plans. ✅ Focusing on investments that generate significant capital gains instead of interest income or ineligible dividends.
• Frequent short-term trading of equities to realize numerous capital gains.
• Investing heavily in foreign shares that pay unhedged foreign dividends.

Correct answer: Focusing on investments that generate significant capital gains instead of interest income or ineligible dividends.

Explanation: In Canada, only 50% of capital gains are taxable, making capital gains a more tax-efficient form of income than interest or certain types of dividends for high-income earners.