some questions on mutual fund

Are you obligated to pay tax on the capital gain before redemption? Can you recommend me a good discount brokerage in Canada? Since the government started taxing Income Trust last year, does that mean Segregated Funds have to pay taxes on their incomes too?

DonYuan Wrote: ------------------------------------------------------- > Are you obligated to pay tax on the capital gain > before redemption? In the US you are. > Can you recommend me a good discount brokerage in > Canada? Can’t recommend anything in Canada except skiing, beer, and hockey > Since the government started taxing Income Trust > last year, does that mean Segregated Funds have to > pay taxes on their incomes too? Some Canadian needs to answer this.

FrankArbia will answer this.

if it is outside of an RSP you have to pay Capital gains tax when you redeem/sell the units . If it is within the RSP you defer the tax until withdrawl from the plan .

I did some research and found out that you still have to pay taxes on capital gain even when you still hold the mutual fund.

Thats the biggest drawback of mutual funds. ETF’s eliminate this headache.

all of the major banks have discount brokerage accounts, if you look on their websites they will quote fees etc. If you are looking to deal in stocks and options I know a few people who have opened accounts online through interactivebrokers.ca…fees are substantially less

DonYuan Wrote: ------------------------------------------------------- > I did some research and found out that you still > have to pay taxes on capital gain even when you > still hold the mutual fund. It’s worse than that. You will have to pay someone else’s capital gains while you still own the mutual fund. Suppose that your mutual fund bought MSFT in 1986 (i.e., the mutual fund’s basis is about 0) but you just bought the mutual fund yesterday. If the fund sells its position in MSFT, the capital gains are distributed to current mutual fund owners, i.e., you. Ouch. This is especially painful when you own a mutual fund that has done poorly relative to everyone else and they fire the manager. The new manager comes in, sells all the old stuff, and hits you with a big tax bill on top of poor performance. I think if everyone knew that, ETF’s would be a lot more popular.

In the UK there’s no tax within the wrapper on capital gains. It’s all on the individual upon sale. Seems like a more equitable system to me…