Converting Income to the Right Type with Corporate Class Funds

Investing for income can mean that you have to chose between the most appropriate investment and the most tax-efficient one. You can convert investment income into the right type using corporate class funds.

The most highly taxed income is interest. There is a significant benefit for you if you can convert interest income into dividends or capital gains.

The lowest taxed of all investment income is deferred capital gains. They are taxed at preferred rates, but if you can defer the tax for years or even decades, you maximize your tax savings.

One company, Natixis (formerly NexGen Financial) deserves special mention because it has by far the most tax-efficient structure.

This article was written for The TaxLetter, a subscription newsletter for accountants and tax specialists.

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