SOURCE: Yorkville Asset Management Inc.

Yorkville Asset Management Inc.

March 24, 2016 17:14 ET

Federal Government Budget Implications-Mutual Fund Corporation

TORONTO, ON--(Marketwired - March 24, 2016) - The federal government announced their budget on March 22, 2016. The government is proposing to make changes to the Income Tax Act which will eliminate the tax-deferral benefit available to the corporate-class mutual fund structure. Under the budget proposal, the exchange of shares of a mutual fund corporation, from one fund to another fund, will be treated as a disposition at fair market value. 

As a result of this announcement, effective after September 2016, investors will realize a capital gain or loss on their shares when they switch from one fund that is a class of a mutual fund corporation to another fund that is a class of a mutual fund corporation. This proposed change will not apply to switches between shares of the same mutual fund class where the difference between the shares relates to management fees or expenses.

Many investment funds are structured as classes of a mutual fund corporation, including the mutual funds that are classes (the "Funds") of Heritage Yorkville Mutual Fund Corporation, which is managed by Yorkville Asset Management Inc. ("Yorkville"). Yorkville will continue to assess the budget proposal and its potential impact and, once all of the details are known, will determine the best long-term course of action for the Funds. 

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