WHOS BUYING SEG FUNDS?
Segregated Funds, like most investments, are subject to taxation. However, unlike traditional investment vehicles like GICs and Canada Savings Bonds (CSBs), which earn only interest income, segregated funds earn dividend income and capital gains or losses in addition to interest income. Dividend income and capital gains are taxed at a lower rate than interest income. This means that segregated funds have a substantial tax advantage over interest-bearing investment vehicles. RSP TAXATION Segregated funds registered as an RSP are not subject to tax as tile investment grows. However, when amounts are withdrawn or when an RSP is converted into an income-generating plan such as a RIF, payments is fully taxable as they are received. Financial institutions offering a RIF are required by law to withhold tax on any unscheduled withdrawal. RIF TAXATION Tax must be withheld from RIF income that is in excess of the minimum amount in each calendar year. In addition, financial institutions offering
