The 2016 federal budget, released on March 22, contains several
items of interest to investors. Some of the proposals provide a
limited window of time for investors to take action before the new
rules come into effect.
Taxation of corporate class mutual funds
Canadian mutual funds can be in the legal form of a trust or a
corporation. While most funds are structured as mutual fund trusts,
some are also structured as mutual fund corporations (otherwise
known as corporate class mutual funds or 'switch
funds').
For those investing outside of their registered plans, one of
the key benefits of corporate class mutual funds is their ability
to exchange shares of one class of the mutual fund corporation for
shares of another class on a tax deferred basis. This allows
investors to switch between funds without triggering capital gains
or losses. This ability to switch between funds has allowed
investors to rebalance regularly without concern for the tax
consequences. A
