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Do I pay tax on the original invested amount on a mutual fund or just the income gained?



Our response:

Thank you for your question Cindy. The answer to your question depends on a number of factors.

There is information on our website on our website on how mutual funds work and also about how mutual funds are taxed:

  • If your mutual funds are held in a non-registered account, any money you make on them is subject to tax. Interest, dividends and capital gains are all treated differently for tax purposes.
  • If you hold your mutual funds in a registered plan, such as a Registered Retirement Savings Plan (RRSP), you won’t pay tax on the money you make as long as that money stays in the plan. When money is withdrawn from the plan, it will be taxed as income in the year of withdrawal.
  • With a Tax-Free Savings Account (TFSA), you don’t pay any tax on the money you make while it’s in the plan – or when you take it out.

You may also find useful information in this article about investors and tax.

Speak to a registered financial advisor or tax professional for more information about tax considerations with mutual fund investments.

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