Measures introduced in the 2016 federal budget
proposed that exchanging units of one corporate class fund for
another would no longer be tax deferred, starting October 1, 2016.
This proposal was highlighted in our post-budget release titled
2016 Federal Budget impact on investors. Draft legislation
was released on July 29, 2016, which extended the effective date of
this change to January 1, 2017.
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 was
the ability to exchange shares of one class of the mutual fund
corporation for shares of another class on a tax deferred basis.
Investors were essentially able to switch between funds without
triggering
