Scenario 17: 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?

Question: Scenario 17: 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. The correct answer is "50% of the capital gain is added to income and taxed at the investor's marginal rate.". This capacity-fill scenario 17 reinforces the same competency for the ific bank and follows the certified explanation standard.