A client holds Series A units of a corporate class mutual fund. They decide to switch their investment to Series F units of a different fund managed by the same corporate class structure. Which of the following is the most accurate tax consequence of this switch?

Question: A client holds Series A units of a corporate class mutual fund. They decide to switch their investment to Series F units of a different fund managed by the same corporate class structure. Which of the following is the most accurate tax consequence of this switch?

Answer options:

• A capital gain or loss will be immediately triggered due to the change in fund series. ✅ The switch will be a tax-deferred event, and the ACB will carry over to the new series.
• The switch is considered a redemption and new purchase, triggering immediate tax implications.
• Only the fees associated with the switch are tax deductible; no capital gains/losses apply.

Correct answer: The switch will be a tax-deferred event, and the ACB will carry over to the new series.

Explanation: A switch between different series or different funds within the same corporate class structure is generally a tax-deferred event. The investor's Adjusted Cost Base (ACB) is carried over to the new fund or series, meaning no capital gain or loss is triggered at the time of the switch. This allows for tax-efficient portfolio rebalancing. (IFIC Chapter 6: Switches within Corporate Class)