From a tax-efficiency perspective, it is best to hold investments that generate the least tax-efficient income inside a tax-sheltered account like an RRSP. Interest income, primarily generated by bond funds, is 100% taxable at an investor's marginal tax rate and is therefore the least tax-efficient. By moving the DEF Bond Fund into the RRSP, Darryl shelters this highly-taxed interest income from annual taxation. Canadian equity funds are more tax-efficient in a non-registered account due to the dividend tax credit and the 50% inclusion rate for capital gains.

B. The GHI Global Equity Fund generates foreign income (taxed at the full marginal rate) and capital gains. While not ideal, the bond fund is less tax-efficient overall.

C. This "pro-rata" approach is not the most tax-efficient, as it leaves a significant portion of the least tax-efficient asset (the bond fund) in the taxable account.

D. The ABC Canadian Equity Fund is the most tax-efficient to hold in a non-registered account due to the favourable tax treatment of Canadian dividends and capital gains.

- Canadian Securities Institute. (2022). Investment Funds in Canada (IFC). Chapter 13: Taxation of Investment Income, Section "Tax-Efficient Investing", pp. 13-18 to 13-19. The text advises holding interest-bearing securities in registered plans and securities that generate Canadian dividends and capital gains in non-registered plans.

- Robinson, C., & Wright, D. (2013). On the tax-efficiency of Canadian mutual funds. Canadian Tax Journal, 61(3), 585-620. This academic paper analyzes the tax efficiency of different investment income types in Canada, confirming that interest income is the least tax-efficient and thus best suited for tax-sheltered accounts.