Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Tax consequences of transferring units in a mutual fund trust for units in another mutual fund trust in the same family of funds.
Position: There is a disposition.
Reasons: No roll-over is available in this situation.
November 7, 2001
OTTAWA TSO HEADQUARTERS
Fairness K.Cooper
957-8984
2001-010356
XXXXXXXXXX
Transfer between mutual funds - Fairness request
Attached is correspondence received via the Shawinigan Tax Centre with respect to the above-noted matter for your attention. An officer in the problem resolution office suggested that we direct the letter to your section.
We have indicated to XXXXXXXXXX that his understanding is correct: transfers between different mutual fund trusts in the same family give rise to dispositions and he should have included the gains therefrom in the calculation of his income. The switch or transfer of units of a mutual fund trust by a unitholder necessarily results in a disposition of those units as the unitholder has redeemed units, received proceeds of disposition and used these proceeds to buy units of another mutual fund trust. Because there is a disposition of units a T5008 information return has to be filed and the unitholder should have received a T5008 slip in respect of the disposition.
As a result, XXXXXXXXXX confirmed his request that his return for the XXXXXXXXXX taxation year be adjusted accordingly on the basis of the information contained in his letter and that any penalty and interest charges resulting from the reassessment be waived on the basis of that he received conflicting information from CCRA. We have advised XXXXXXXXXX that this matter has been forwarded to your attention for assessing action and consideration with regard to waiver of interest and any penalties.
F. Lee Workman
Manager
Financial Institutions Team
Income Tax Rulings Directorate
Policy and Legislation Branch
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