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Fiscal impact of investment products

: Revenue type related to this product

 :  Revenue type not related to this product

Capital gains and losses

Any realized capital gain must be declared during the taxation year. 50% of this gain must be added to your taxable income for the year, and is therefore subject to tax, in accordance with your marginal tax rate. Please note that for some investors (especially those who are very active and for whom most of their income comes from their investment trades), capital gains can be considered as income. If you believe this situation may apply to you, we suggest you consult your tax specialist.

Capital losses can be deducted from realized capital gains. They can be used to reduce or compensate materialized capital gains over the three preceding tax years, or can be deferred indefinitely to reduce future capital gains.


The interest earned on a fixed income security is taxed as income at your marginal tax rate. The interest must be declared annually, whether it is received or not. Opposed to dividends and capital gains, there is no fiscal advantage to interest income.


The dividend from an equity security is a cash payment to investors for each share held ("dividend per share"). It is paid from the net income or reserves of the company issuing the shares, and serves to provide shareholders a fraction of their equity.

All provinces and territories issue tax credits for dividend income. Dividends paid by Canadian corporations (not foreign companies) are subject to a lower tax rate than interest income. 

Capital distributions

Mutual funds and exchange-traded funds pay distributions. Although the value of each unit decreases by an amount equivalent to the distribution per unit, the overall value of your investment remains the same. When your dividends are reinvested, they will serve to acquire additional units of the fund. The value of your investment will therefore remain the same following reinvestment, but the number of units you hold will increase.

These distributions must be declared each year. Decreases in the unit price does not affect the amount of distributions to be declared. However, if you sell your units today, there would be an impact as the market value would be lower than the book value.

The book value is the total amount invested + all distributions. When units are redeemed, capital gains or losses is calculated by comparing the market value and the book value. The transaction would thus generate a capital loss, which you could used to offset capital gains.

InvestCube tax information 

Since InvestCube portfolios are composed of exchange-traded funds (ETFs), you will receive tax slips to prepare your taxes. The type of tax slips and dates they are sent depend on several factors. The tax characteristics of the distributions (dividends, other income, capital gains, etc.) will be indicated on your tax slips. Please see the "Year-end tax statements mailing schedule" for more information.

Every year, a report is sent to you at the end of February to help you calculate the capital gains and losses following the rebalancing of your InvestCube portfolio. This document may be useful when you are completing your tax return, but for tax purposes, the tax slips are the only official documents issued by National Bank Direct Brokerage (NBDB). If you no longer have an InvestCube portfolio on the date the report is sent, you will not receive a report, but you may request a copy by telephone or the message centre if you are client at NBDN. Charges may apply for the production of the report. 

NBDB makes the necessary adjustments to the adjusted cost base (ACB) when the ETFs declare the distributions that have an impact on the ACB. These adjustments are carried out in April and are based on the information provided by ETF companies. If you no longer have an InvestCube portfolio on the adjustment date, we cannot make adjustments to your portfolio. In this case, by consulting the "Distribution" tables for each ETF online, you can find out the amounts paid in cash and the amounts reinvested to calculate your ACB. Links to the EFT websites can be found on the InvestCube information sheets here.   

Examples of distributions that can have an impact on the ACB:
  • Return of capital distributions. Amount paid in cash AND declared on the tax slip that normally reduces the ACB.
  • Distributions reinvested in the ETF. Amount not paid in cash AND declared on the tax slip that normally reduces the ACB.  

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