Question

Throughout the year, the Redwood Global Equity Fund generated the following outcomes: . $1.00 per unit of interest income from Canadian treasury bills . $2.50 per unit of dividend income from foreign corporations . $7.75 per unit of capital gains from the sale of Canadian corporations . $6.50 per unit of capital gains from the sale of foreign corporations . $2.00 per unit of capital losses from the sale of foreign corporations Given that the Redwood Global Equity Fund is structured as a mutual fund trust, which of the following statements is true?

Accepted Answer

Unitholders will receive $12.25 per unit of net capital gains from Redwood, of which only 50% is subject to tax.

Answer

Redwood can flow the foreign dividends to unitholders, who can then take advantage of the dividend gross-up and tax credit mechanism.

Answer

Redwood can distribute the $2.00 per unit of capital losses to unitholders, who can then use them to offset their capital gains.

Answer

Since Redwood pays the tax on foreign income, it does not distribute dividend or capital gains income from foreign sources to unitholders.

Throughout the year, the Redwood Global Equity Fund generated the following outcomes: . $1.00 per unit of interest income from Canadian treasury…

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