Dear Expert:
I sold approximately $30,000 worth of fund units on December 17, just prior to these funds paying out a large capital gains distribution, thus avoiding an unwanted tax bill. As I still believe in their long-term potential, I would like to re-purchase units of some of these funds. How long must I wait before I do so without attracting the attention of the taxman? Expert Answer:
Unless you had a loss from the sale of your mutual fund units, there are no restrictions as to when you can repurchase them. If, however, you did realize a capital loss on the sale of your units and you wish to be able to claim that capital loss in 2003 either to offset other capital gains last year or perhaps to carry back to the prior three years or to use in a future year, then you must wait at least 30 days before repurchasing those fund units, otherwise your capital loss will be considered to be a "superficial loss" and will be denied. That being said, if you had a gain when you sold your mutual fund units, there is no corresponding "superficial gain" rule and therefore you may immediately repurchase those units without any negative tax consequences.
Do you have a question?
No statement in this article should be construed as a recommendation to buy or sell securities or to provide investment advice or individual financial planning. Morningstar Canada does not provide specific portfolio advice and recommends the use of a qualified financial planner when appropriate.
All Ask the Expert questions are read and considered. Unfortunately we can't provide individual responses or respond to every question. Please note that questions about specific securities cannot be considered. Click here to Ask the Expert.
No statement in this article should be construed as a recommendation to buy or sell securities or to provide investment advice or individual financial planning. Morningstar Canada does not provide specific portfolio advice and recommends the use of a qualified financial planner when appropriate.
