Some mutual funds are created as part of an incorporated structure and this type of fund can usually be identified by the word ‘Class’ in their name. When you buy a corporate class version of a fund (Corporate Class Fund), you are buying a ‘share’ in the mutual fund corporation.
Investing in a Corporate Class Fund can offer the following tax benefits for non-registered investors:
This last benefit is especially significant for those looking to invest in global and fixed-income solutions where interest and foreign income earning are subject to the highest tax rate.
*A Canadian taxable dividend may also be declared in order to offset certain taxes payable by AWTAG.
Corporate class investors have also been able to switch tax-free from one Corporate Class Fund to another within a mutual fund corporation.
However, the recent federal budget announced that after December 2016, switching from one Corporate Class Fund to another within the same mutual fund corporation will be considered a disposition for tax purposes, thereby triggering a capital gain if the investment has a value greater than the adjusted cost base. (This does not apply to switches between series of the same Corporate Class Fund where the only difference is a change in management fee or expenses.)
If you own a Corporate Class Fund, your financial advisor will help you determine the impact that this may have on your portfolio and if you need to take any action before October.
While these tax advantages may be most appealing to non-registered investors, Corporate Class Fund can also be an eligible investment for registered plans. So if the fund is only available as in class version, your financial advisor may determine it’s a suitable investment for your registered plan.
If an investor sells their corporate class holdings with a net capital gain, he/she is responsible for filing that as a capital gain. Such capital gains may be offset by any capital losses carryforward that he/she has.
The recent federal budget announced that after December 2016, switching from one Corporate Class Fund to another within the same mutual fund corporation will be considered a disposition for tax purposes, thereby triggering a capital gain if the investment has a value greater than the ACB. (This does not apply to switches between series of the same Corporate Class Fund where the only difference is a change in management fee or expenses.)
If you own Corporate Class Fund, your financial advisor will help you determine the impact that this may have on your portfolio and if you need to take any action before October.
AGF’s mutual fund corporation is known as All World Tax Advantage Group. Investment choices include an array of individual asset classes and those offering built-in diversification.
|LOW OR LOW-TO-|
Canadian Equity Funds
|AGF Canadian Growth Equity Class|
|AGF Canadian Large Cap Dividend Class*||T & V|
U.S. Equity Funds
|AGF American Growth Class
||T & V|
|AGF U.S. Sector Class
Global Equity Funds
|AGF Asian Growth Class|
|AGF China Focus Class|
|AGF Emerging Markets Class*|
|AGF European Equity Class
||T & V|
|AGF Global Dividend Class*|
|AGF Global Equity Class
||T & V|
Specialty Equity Funds
|AGF Global Resources Class
|AGF Diversified Income Class*|
Fixed Income Funds
|NEW - AGF Fixed Income Plus Class*|
|AGF Short-Term Income Class
|NEW - AGF Total Return Bond Class*|
|AGF Elements Balanced Portfolio Class*||T & V|
|AGF Elements Conservative Portfolio Class*|
|AGF Elements Global Portfolio Class*|
|AGF Elements Growth Portfolio Class*||T & V|
|NEW - AGF Elements Yield Portfolio Class*
* Fund version also available.
Get the power of tax-efficient investing working for you
To invest with AGF's All World Tax Advantage Group and get the power of tax-deferred funds working for your portfolio, contact your financial advisor today.
^For more information on the underlying funds, please visit the mutual funds section on AGF.com .
T,VAGF Series T and V available.
1Please read important disclosure and disclaimer information included on the following page.
2Please read important disclosure and disclaimer information included on the following page.
'AGF Elements', 'Elements', 'What are you doing after work?' and the AGF logo are trademarks of AGF Management Limited and used under licence. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The payment of distributions and/or dividends should not be confused with a fund's performance, rate of return or yield. If distributions and/or dividends paid by the fund are greater than the performance of the fund, your original investment will shrink. Dividends paid as a result of capital gains realized by a fund, and income and dividends earned by a fund are taxable in your hands in the year they are paid. Monthly distributions on Series T and Series V shares may generally be a return of capital so long as there is sufficient capital attributable to the relevant series. Your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base falls below zero, you will have to pay capital gains tax on the amount below zero.
Please refer to the prospectus for each product for complete information regarding targeted annual distributions, minimum investments and other important information.
^Under AGF's distribution policy, Series T and V unit-holders will receive 12 monthly distributions. In addition, if an annual distribution of net realized capital gains and/or net income/capital gains is required, unit-holders will receive an additional 13th distribution in December. This may result in two December distributions - one that is the regular monthly distribution and one annual distribution, if required. This annual distribution must be reinvested in additional units of the fund.
The All World Tax Advantage Group is a mutual fund corporation that currently offers approximately 20 different classes of securities. In addition to fund diversification by investment style, geography, and market capitalization, a key benefit of investing in any of the classes within the group is the possibility of sharing incurred expenses (and losses) of the combined structure potentially offsetting income earnings to minimize chance of a dividend declaration. While the articles of AGF All World Tax Advantage Group Limited provide authority to make distributions out of capital and AGF All World Tax Advantage Group Limited intend both to calculate capital in the manner contemplated by the corporate statute for corporations that are not mutual fund corporations and only to declare distributions out of capital if there is sufficient capital attributable to a series, no definitive case law exists to confirm that a mutual fund corporation may make distributions of capital and how it is to be calculated. Further, no advance income tax ruling has been requested or obtained from Canada Revenue Agency, nor is AGF aware of any published advance income tax ruling or the possibility of obtaining such a ruling, regarding the characterization of such distributions or the calculation of capital for such purposes.
Investors should consult their investment professionals and tax advisors prior to implementing any changes to their investment strategies.
The information contained in this document is designed to provide you with general information and is not intended to be tax advice applicable to the circumstances of the investor.
Publication date - April 27, 2016