TABLE OF CONTENTS. Table of Cases... Cases-i Introduction...I-1

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1 TABLE OF CONTENTS Table of Cases... Cases-i Introduction...I-1 Chapter 1: History of Mutual Funds 1.1 Introduction Joint-Stock Companies and Deed of Trust Companies 1600s The Emergence of the Joint Stock Companies Widespread Use of the Deed of Settlement Company Dutch Funds 1700s Early British Funds 1800s Early North American Funds Chapter 2: Summary of Taxation of Trusts 2.1 Classification of Trusts under the Income Tax Act Definitions of Trust The Personal Trust Inter Vivos Trust Testamentary Trust Commercial Trusts Residency of Trust The General Rules of Taxation of Trusts in Canada Transfer of Property to a Trust Transfer of Property from a Trust Computation of Income of a Trust (a) Taxation Year of Trust (b) Taxed as Individual (c) Rules Applicable to Computation of Income Losses Preservation of Source of Income Disposition of Interests in a Trust Benefits from a Trust Part XII.2 Tax Non-Residents (a) Distributions of Income from a Trust (b) Distributions of Capital Gains from a Trust (c) Distributions of Returns of Capital (d) Dispositions of Interest in a Trust (e) Benefits from a Trust to a Non-Resident Variation of Trusts i (Mutual Fund Trusts) (2015 Rel. 1)

2 2.3 Subsection 75(2) Introduction History of Subsection 75(2) Application of Subsection 75(2) Chapter 3: Summary of Taxation of Public Corporations 3.1 Definition of Public Corporation General Corporation Resident in Canada Shares Listed on Designated Stock Exchange in Canada Election to be a Public Corporation Prescribed Conditions (a) Qualified for Distribution to the Public (b) Equity Share (c) Insider of a Corporation (d) Block of Shares Election Not to be a Public Corporation Taxation of Public Corporation Tax Rates Integration of Taxes Capital Taxes Paid-Up Capital Mortgage Investment Corporations Qualification Taxation of Mortgage Investment Corporation Taxation of Shareholders of a Mortgage Investment Corporation Eligibility for Investment Investment Corporations Chapter 4: Taxation of Mutual Fund Trusts 4.1 Introduction The Benefits Non Application of 21-Year Rule Non Application of Alternative Minimum Tax Non Application of Part XII Not Taxable Canadian Property Subsection 39(4) Election Exclusion from Section 116 Requirements Non Application of Mark-to-Market Rule (s ) Status as Qualified Investments for Registered Plans Prohibited Investment Rules Status as Foreign Property ii

3 Capital Tax Reduction in Cost Base of Capital Interest Foreign Reporting Capital Gains Refund Mechanism Mutual Fund Trust Requirements The Definition Open-Ended Paragraph 108(2)(a) Requirements Closed-Ended Paragraph 108(2)(b) Requirements (a) The 80% Test (b) The 95% Test (c) The 10% Test Requirements of Unit Trust to be a Mutual Fund Trust (a) Restriction on Activities (b) Dispersal Requirements (c) Limitation on Non-Resident Beneficiaries (d) Deemed Mutual Fund Trust: The Subsection 132(6.1) Election (e) The Subsection 132(6.2) Deeming Rule Refund Mechanism Capital Gains Redemptions Mergers of Mutual Funds Section Year End: December 31 Versus December Expenses of a Fund Nature of Income Earned by the Fund Deductibility of Expenses Cost of Issuing Units Fees Paid to Non-Residents Year-End Distributions Chapter 5: Taxation of Mutual Fund Corporations 5.1 The Definition The Benefits Flow Through of Income Refund Mechanisms Qualified Investments Status Prohibited Investment Rules Foreign Property Status Capital Tax Issues Exclusion from Section 84 Treatment Generally Not Taxable Canadian Property Subsection 39(4) Election General Exclusion from Section 116 Requirements Non Application of Mark-to-Market Rule (s ) Foreign Reporting iii (Mutual Fund Trusts) (2015 Rel. 1)

4 5.3 Comparison of Taxation Mutual Fund Trust and Corporations Liability Transparency and Double Taxation Capital Tax Flow Through of Losses Switching of Units/Shares Mergers of Funds Chapter 6: Real Estate Investment Trusts ( REITs ) 6.1 Mutual Fund Trust Qualification Simple Structure: Direct Ownership Complex Structure: Indirect Ownership Dividend Reinvestment Plans ( DRIPs ) Chapter 7: Income Trusts 7.0 New Tax Regime for Income Trusts Domestic Income Trusts: The Typical Trust on Trust on Partnership Structure Classification of the Trusts The Fund Classification of the Trusts The Trust Foreign Property Issues Issues with the Notes Tax Shelter Rules Cross-Border Income Trusts Converting a Company into an Income Trust Tax Issues for Investors Returns of Capital In-Specie Distributions Royalty Trusts Converting an Income Trust to a Public Corporation Exchange Method Distribution Method Chapter 8: Split Share Corporations 8.1 Mutual Fund Corporation Status Part VI.1 Tax Capital Tax Suspended Loss Rules Tax Under Section 206.1/207.1(5) Cost of Stock Dividends Capital Gains Issues with Voting Rights on Capital Shares Typical Prospectus Disclosure iv

5 Chapter 9: Split Trusts Chapter 10: Switch Funds 10.1 Structure of Switch Fund Mutual Fund Trusts Mutual Fund Corporations Issues with Switch Funds Sharing of Tax Attributes Increased Turn Over Switching Versus Redeeming Suspended Loss Rules Chapter 11: Labour-Sponsored Venture Capital Corporations 11.1 Introduction Registration Requirements Investment Restrictions Federal Penalty Taxes Revocation of Registration Restrictions on Transfers Restrictions on Redemption by Holders Tax Credits Available to Purchaser of Class A Shares RRSP Eligbility Taxation of LSVCC Mergers and Termination of LSVCC Chapter 12: Miscellaneous Issues 12.1 Offshore Investment Fund Property Using Special Classes of Units/Shares for Differing Management Fees Class T Units Segregated Funds: The Near Perfect Solution? Qualified Investment Status Borrowing from Non-Residents Clone Funds Appeal Process Assessments Objections Appeals Canadian Service Provider Carrying on Business in Canada Background on Carrying on Business in Canada Section Treaty Relief Summary FACTA v (Mutual Fund Trusts) (2015 Rel. 1)

6 Background Application to Canadian Investment Funds Obligations under FATCA (a) Registration with IRS (b) Due Diligence Financial Accounts (c) Due Diligence Procedure (d) Due Diligence Timelines Individual Accounts (e) Due Diligence Timelines Entity Accounts (f) Annual Reporting to CRA Loss Restriction Event Rules Abbreviations... ABBR-1 Appendix...APP-i A. Income Tax Act [excerpts]... A-1 B. Income Tax Regulations [excerpts]... A.1-1 Interpretation Bulletins... B-1 Forms... C-1 Index... Index-1 vi