What are the income tax aspects of owning closed-end fund shares?

If you hold your shares in a taxable account, then at the end of each calendar year, you will receive a T5 Income Tax information slip, which will identify all of the taxable income paid to you from the closed-end fund.

Income earned by the company’s investment portfolio will typically flow through to the common share-owners and the income will retain its character for income tax purposes. For example, if the company receives dividend income from its investments and subsequently pays that income to its share-owners, then the income will be recorded as Dividend Income on the T5 Income Tax information slip and taxed accordingly.

In addition to the T5 taxable income, should the shares be sold in a calendar year you may incur capital gains or losses, which would need to be recorded and taxed accordingly.

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