For a variety of reasons, it can be beneficial for Canadian investors to save and invest some of their money in non-registered accounts. The challenge is that non-registered accounts tend not to be tax-sheltered. This is when corporate class funds can help. Corporate class is simply a different structure for mutual funds that extends certain tax efficiencies to non-registered investments.
Corporate class mutual funds are grouped together to form a corporation for tax purposes. The objective of this structure is to minimize taxable distributions to investors who hold investments in non-registered accounts. This is achieved by sharing income and expenses across the classes of funds in the corporation and only distributing dividends and capital gains to investors, which are taxed more favourably than interest income.
Contact your financial advisor today to learn the benefits of investing in a corporate class structure or to find out about Sentry Corporate Class.
According to draft legislation from the Federal government, effective January 1, 2017 switching between mutual funds in a corporate class structure will be considered a deemed disposition at fair market value and may trigger a capital gain or loss. Switching between series of a fund in corporate class is not considered a taxable disposition.