Why do National Bank Mutual Funds distribute income?
National Bank Securities, as manager of National Bank Mutual Funds, seeks to limit the impact taxes will have on overall Fund performance. Because funds are taxed at the highest rate of tax, and because unitholders are generally taxed at a lower rate, there is an advantage to having the Funds distribute income to unitholders. By doing so, National Bank Mutual Funds generate an after-tax return which is higher than if the income remained in the Funds and the Funds paid the taxes on this income. It is worth noting that if investments in National Bank Mutual Funds are made within registered plans such as RRSPs, RRIFs, RESPs, LIRAs, LIFs, or DPSPs, unitholders are not required to pay any income taxes as long as the invested capital remains in these types of plans. However, if the income was not distributed, the Funds would still be subjected to the applicable income taxes which would negatively affect yields. Moreover, the ncome Tax Act allows mutual funds to claim a capital gains reimburs
National Bank Securities, as manager of National Bank mutual funds, seeks to limit the impact taxes will have on overall fund performance. Because funds are taxed at the highest rate and unitholders are generally taxed at a lower rate, there is an advantage to having the funds distribute income to the unitholders. National Bank mutual funds generate after-tax returns that are higher than if the income remained in the funds and the funds paid the tax on the income. It is worth noting that if investments in National Bank mutual funds are made within registered plans such as RRSPs, RRIFs, RESPs, LIRAs, LIFs, or DPSPs, unitholders are not required to pay any income tax as long as the capital remains invested in these types of plans. However if the income is not distributed, the funds are subject to income tax which can negatively affect yields. Moreover, the Income Tax Act allows mutual funds to claim a capital gains reimbursement. Therefore, National Bank Securities, using a calculation t
