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If I purchase an ETF in December that has paid monthly interest and risen in value, am I subject to tax on all annual earnings?



Our response:

Taxes on exchange traded funds (ETFs) depend on many factors, including:

  • Whether you hold them in a registered or non-registered account;
  • The registered account you use (TFSA, RRSP, RRIF, etc.);
  • Whether they are Canadian or foreign ETFs.

With ETFs, you’ll generally pay tax on:

  • any capital gains you make from an ETF when you sell it, and
  • any distributions you receive from the ETF.

You should not be affected by distributions that occurred before you purchased the ETF. However, before you make a purchase, speak to your registered financial advisor or tax professional to learn how taxes apply in your situation – based on where you are holding the ETF and the type of ETF you purchase. Learn more about how ETFs work.

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