Corporate Class

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AWM > Tax Strategies > Corporate Class

Corporate Class

Corporate Class mutual funds offer the key benefit of tax-deferred funds switching and accelerated compound growth.

They're ideal for individuals looking for tax-favorable investments outside RRSPs, and have additional features for corporations.

For both individuals and corporations:

• Control when you trigger tax. In general one must pay tax when receiving interest income. However, with Corporate Class funds you can defer tax indefinitely, giving you control over when taxes get triggered.
• Convert interest income to capital gains. The corporate class structure minimizes the potential for distributions from fixed income vehicles. Investors in this class can "convert" interest income to capital gains, which have a more favorable tax structure compared than interest. For example, money market and bond funds would benefit from capital gains tax rates rather than interest income, letting you keep more of your investments.

For corporations:

• Withdraw trapped money from the corporation tax-free. Using a Capital Dividend Account (CDA), a business owner can minimize taxes payable by withdrawing from the CDA the non-taxable portion of the capital gains. This is money that would otherwise remain trapped in the corporation.
• Avoid Provincial Capital Tax. Although federal capital tax has been removed, provincial capital taxes may still apply. And since these taxes hit assets instead of income the tax impact could be significant. Corporate Class funds qualify your company for a provincial Capital Tax exemption.

How do these funds work?

Corporate Class funds have an accumulation phase that comprises your initial investment as well as annual contributions over a timeframe you select. After the accumulation phase you begin making annual withdrawals from the fund for income. The accumulation and deaccumulation phases with this fund class can give you significant tax savings and an improvement in net after-tax income compared with non-Corporate Class funds.

 

(Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.)