An investor holds 1,000 units of a mutual fund with an average Cost Base (ACB) of $15.00 per unit. The investor decides to switch these units to another fund within the same corporate class structure. The current NAV per unit for the original fund is $18.00. What are the immediate tax implications of this switch?

Question: An investor holds 1,000 units of a mutual fund with an average Cost Base (ACB) of $15.00 per unit. The investor decides to switch these units to another fund within the same corporate class structure. The current NAV per unit for the original fund is $18.00. What are the immediate tax implications of this switch?

Answer options:

• A taxable capital gain of $3,000 is triggered.
• A taxable capital loss of $3,000 is triggered. ✅ No immediate taxable event occurs.
• The entire $18,000 value becomes taxable income.

Correct answer: No immediate taxable event occurs.

Explanation: Within a corporate class structure, switching between different funds (classes) of the same corporation is generally not considered a disposition for tax purposes and therefore does not trigger an immediate capital gain or loss. This allows for tax deferral.