Canadian here, and we are opening our first un registered (taxable account)
I have a question about ETS. If we have an ETF I know that any disbursements from the ETF are taxable, depending on the type of income (Interest, Dividends or Cap Gains)
Now I am curious about what happens if there is some turn over in the fund during the year. They sell some stock (at a profit) and buy something different. Maybe a re balancing or in response to a change in an index it. Say they don’t keep anything in cash, but it is all reinvested.
Does this very act of an internal capital gain necessarily trigger any tax event if there are no related distributions?
So, I am wondering if internal transactions and turnover will trigger tax events? If not who pays the tax?
Also, just trying to understand what would be the best way to study tax efficiency of ETFS in a taxable account.
Do ETFS and Mutual Funds work differently with regard to taxation events related to internal turnover transactions?
Thanks
Submitted January 08, 2023 at 12:07AM by rm2018 https://ift.tt/lW3oDvs
