In the budget announced March 21, 2013, the government proposed to eliminate the tax benefits associated with forward agreements used by some mutual funds to achieve capital gains treatment on income that would otherwise be treated as ordinary income.
To do this, very simply, a fund would enter into a forward agreement with a counterparty. The forward agreement would provide the fund with a rate of return that was linked to an underlying fund. The income from this forward agreement would be considered capital gains, rather than interest income, which is taxed at a more favourable rate, making these funds quite popular with investors in non registered accounts. Under the budget, these actions will no longer be permitted.
Some of the funds that were capped because of this announcement include:
CI Mutual Funds
- Cambridge Income Corporate Class
- Cambridge Income Fund
- CI Global High Dividend Advantage Corporate Class
- CI Global High Dividend Advantage Fund
- CI Short-Term Advantage Corporate Class
- Signature Diversified Yield Corporate Class
- Signature Diversified Yield Fund
- Signature High Yield Bond Corporate Class
- Signature High Yield Bond Fund
Manulife Mutual Funds
- Manulife Corporate Bond Class
- Manulife Floating Rate Income Class
- Manulife Strategic Balanced Yield Class
- Manulife Strategic Income Class
- Manulife Structured Bond Class
- Manulife Yield Opportunities Class
- Manulife Balanced Private Pool
- Manulife Balanced Income Private Pool
- Manulife Canadian Fixed Income Private Pool
- Manulife Corporate Fixed Income Private Pool
- Manulife Global Fixed Income Private Pool
Russell Investments
- Russell Fixed Income Class and the
- Russell Global High Income Bond Class
Franklin Templeton Investments
- Bissett Bond Yield Class
- Bissett Canadian Short Term Bond Yield Class
- Bissett Corporate Bond Yield Class
- Franklin Templeton Money Market Yield Class
- Templeton Global Bond Hedged Yield Class
RBC / PH&N
- RBC Bond Capital Class
- PH&N Total Return Bond Capital Class
- RBC High Yield Bond Capital Class
Mackenzie Investments
- Mackenzie Sentinel Canadian Short-Term Yield Class
- Symmetry Balanced Portfolio Class
- Mackenzie Sentinel Managed Return Class
- Symmetry Conservative Income Portfolio Class
- Mackenzie Sentinel North American Corporate Bond Class
- Symmetry Conservative Portfolio Class
- Mackenzie Sentinel Strategic Income Class
- Symmetry Fixed Income Portfolio Class
- Mackenzie Sentinel U.S. Short-Term Yield Class
- Symmetry Growth Portfolio Class
- Quadrus Fixed Income Corporate Class
- Symmetry Moderate Growth Portfolio Class
TD Mutual Funds
- TD Corporate Bond Capital Yield Fund
- TD Fixed Income Capital Yield Pool Class
- TD Global High Yield Capital Class
IA Clarington
- IA Clarington Focused Balanced Class
- IA Clarington Global Tactical Income Class
- IA Clarington Strategic Corporate Bond Class
- IA Clarington Strategic Income Class
- IA Clarington Tactical Bond Class
- IA Clarington Tactical Income Class