A Canadian resident earns interest income from a corporate bond and capital gains from selling shares of a Canadian public company. How is this income generally taxed?

Question: A Canadian resident earns interest income from a corporate bond and capital gains from selling shares of a Canadian public company. How is this income generally taxed?

Answer options: ✅ Interest income is fully taxable, and capital gains are 50% taxable.

• Both interest income and capital gains are 50% taxable.
• Both interest income and capital gains are fully taxable.
• Interest income is tax-exempt, and capital gains are fully taxable.

Correct answer: Interest income is fully taxable, and capital gains are 50% taxable.

Explanation: In Canada, interest income from investments like bonds is generally fully taxable as ordinary income. Capital gains, however, are typically 50% taxable, meaning only half of the gain is included in the investor's taxable income.