An investor holds 1,000 units of Fund A at an ACB of $25 per unit. The investor decides to switch all units of Fund A to Fund B, both of which are corporate class funds within the same corporate structure. At the time of the switch, Fund A's units are valued at $30 per unit. What are the immediate tax implications of this switch?

Question: An investor holds 1,000 units of Fund A at an ACB of $25 per unit. The investor decides to switch all units of Fund A to Fund B, both of which are corporate class funds within the same corporate structure. At the time of the switch, Fund A's units are valued at $30 per unit. What are the immediate tax implications of this switch?

Answer options: ✅ No immediate capital gains or losses are triggered.

• A capital gain of $5,000 is immediately realized.
• A capital loss of $5,000 is immediately realized.
• The gains are deferred, but the ACB of Fund B will be $30 per unit.

Correct answer: No immediate capital gains or losses are triggered.

Explanation: Switches between corporate class funds within the same mutual fund corporation are generally non-taxable events, meaning no capital gain or loss is triggered at the time of the switch, as per Canadian tax rules.