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 Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
950923
XXXXXXXXXX L. Holloway
(613) 957-8953
Attention: XXXXXXXXXX
April 28, 1995
Dear Sirs:
Re: Taxation of Mutual Funds and Treatment of Capital Losses
This is in reply to your letter of March 24, 1995 concerning the tax treatment of mutual fund income. Our letter to you of July 26, 1994 explained the taxation of mutual fund income and losses in detail. To summarize, the income earned by a mutual fund which is paid or payable to an investor is required to be included in the investor's income on a yearly basis. Increases or decreases in the investment value of the fund are not recognized until the units have been disposed of by the investor.
With respect to the capital loss your spouse has realized this year on the disposition of her mutual fund units, 75% of that loss (the allowable capital loss) can only be deducted against taxable capital gains (75% of capital gains) realized in the same year. Where that is not possible, any net capital loss (defined as the excess of allowable capital losses over taxable capital gains for the year) may be carried back three years and forward indefinitely to future years but may only be applied against net taxable capital gains.
The tax consequences outlined above are specifically provided for in the Income Tax Act. Revenue Canada does not write or amend legislation; the function of Revenue Canada is to administer the laws as set out in the Income Tax Act. The Department of Finance is responsible for writing and considering amendments to existing legislation and any suggested changes should be directed to:
Department of Finance
Tax Policy Branch
L'Esplanade Laurier
140 O'Connor Street
Ottawa, Ontario
K1A 0G5
Yours truly,
T. Murphy
A/Section Chief
Trusts Section
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1995
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© Sa Majesté la Reine du Chef du Canada, 1995
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