IFIC Mutual Funds Licensing Practice Exam · Question
David owns units in a mutual fund and received a distribution from the fund. His T3 slip shows the following: Eligible Dividends: $150, Capital Gains: $200, Return of Capital (ROC): $100. How much of this distribution reduces David's Adjusted Cost Base (ACB)?
Return of Capital (ROC) distributions are not immediately taxable and instead reduce the investor's ACB. Eligible dividends and capital gains distributions are
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Question: David owns units in a mutual fund and received a distribution from the fund. His T3 slip shows the following: Eligible Dividends: $150, Capital Gains: $200, Return of Capital (ROC): $100. How much of this distribution reduces David's Adjusted Cost Base (ACB)?
Answer options: ✅ $100
- $450
- $350
- $0
Correct answer: $100
Explanation: Return of Capital (ROC) distributions are not immediately taxable and instead reduce the investor's ACB. Eligible dividends and capital gains distributions are taxable in the year received and do not affect the ACB directly.
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