IFIC Mutual Funds Licensing Practice Exam · Question
When an investor sells mutual fund units in a non-registered account for more than their Adjusted Cost Base (ACB), what is the tax implication?
In Canada, for non-registered accounts, capital gains are taxed at an inclusion rate of 50%. This means half of the capital gain is added to the investor's taxa
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Question: When an investor sells mutual fund units in a non-registered account for more than their Adjusted Cost Base (ACB), what is the tax implication?
Answer options:
- The entire gain is tax-free.
- The entire gain is added to income and taxed at 100%. ✅ 50% of the capital gain is added to income and taxed at the investor's marginal rate.
- The loss can be carried forward indefinitely, but gains are never taxed.
Correct answer: 50% of the capital gain is added to income and taxed at the investor's marginal rate.
Explanation: In Canada, for non-registered accounts, capital gains are taxed at an inclusion rate of 50%. This means half of the capital gain is added to the investor's taxable income and taxed at their marginal tax rate. losses can be used to offset gains.
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