Corporate Class Fund - Financial Advisory

Corporate Class Fund


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Corporate Class Fund

If you are investing outside of a registered plan, distributions and transactions could result in a tax liability. You can reduce the impact of taxes on your investment returns with Corporate Class Funds.

 Corporate Class provides many of the benefits that can be found with tax-free savings accounts or other registered accounts, including the ability to defer tax on investment income and capital gains. This allows for increased compound growth over the long term and the ability to make investment decisions, such as rebalancing your portfolio, without worrying about the tax consequences.

Corporate Class also allows you to draw tax-efficient cash flow from your investments through T-Class funds. Corporate Class is an ideal choice for all non-registered investments.

How it Corporate class investments works

According to the Income Tax Act, an investor may switch between classes of capital stock of the same corporation without tax consequences. This principle is the basis for CI Corporate Class and it can result in significant tax benefits for investors.

Effectively, the structure creates an umbrella for the funds in the corporation. Under this umbrella, investors can switch between classes, or funds, without triggering a capital gain or loss. A capital transaction only occurs when you redeem from the corporation. In addition, distributions to shareholders of the mutual fund corporation will only be a Canadian dividend or a capital gains dividend – both of which receive preferential tax treatment. In comparison, a trust can also pay out interest income – which attracts the highest level of tax.

If a mutual fund realizes a capital loss in a year, it cannot be claimed by investors for tax purposes. However, the fund can use these losses to offset capital gains. The Corporate Class umbrella allows these losses and gains to be spread over a wide base of many funds, instead of being confined to only one fund, as it is with a trust.