John invests $10,000 in a non-registered mutual fund. Over the year, the fund distributes $200 in Canadian dividends and $300 in capital gains. At year-end, the fund units are worth $10,500. What is John's Adjusted Cost Base (ACB) at year-end, assuming no further transactions?

Question: John invests $10,000 in a non-registered mutual fund. Over the year, the fund distributes $200 in Canadian dividends and $300 in capital gains. At year-end, the fund units are worth $10,500. What is John's Adjusted Cost Base (ACB) at year-end, assuming no further transactions?

Answer options: ✅ $10,000

• $10,500
• $9,500
• $9,700

Correct answer: $10,000

Explanation: For a non-registered account, distributions (dividends and capital gains) are taxable income in the year they are received but do not directly change the ACB of the units unless they are reinvested and new units are purchased. If reinvested, the ACB increases by the amount reinvested. Assuming no reinvestment, the ACB remains $10,000. The current market value only matters for calculating future capital gains/losses upon sale.