Vanguard conversion to Admiral shares: Are they taxable?

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gobsmack
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Vanguard conversion to Admiral shares: Are they taxable?

Post by gobsmack »

Once the balance in an account is high enough, it is possible to convert to Admiral shares: https://investor.vanguard.com/mutual-fu ... ral-shares

In the US, these conversions are not taxable events. Does anyone know if they are taxable in Canada? Do they trigger capital gains in Canada?
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AltaRed
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Re: Vanguard conversion to Admiral shares: Are they taxable?

Post by AltaRed »

If you mean converting from a Vanguard ETF to Admiral shares... most likely it is a taxable event because they are a different business structure. That said, don't rely on my judgement. That is beyond my pay grade. Not that a Canadian resident can buy Vanguard mutual fund shares in Canada anyway.

Canada allows one to change from one type of mutual fund, e.g. A class to B class, without triggering a capital event because the fund is exactly the same, with only a different MER/cost structure. At one time, mutual fund companies developed Corporate Class where as long as funds stayed in the Corporation, it was not a taxable event, e.g. going from US equity to Cdn equity. I think that loophole got closed recently though.
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gobsmack
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Re: Vanguard conversion to Admiral shares: Are they taxable?

Post by gobsmack »

AltaRed wrote: 29 Oct 2017 13:10 Canada allows one to change from one type of mutual fund, e.g. A class to B class, without triggering a capital event because the fund is exactly the same, with only a different MER/cost structure.
I think this is what would be happening in this case. They are the same mutual fund but the shares get converted from regular shares to admiral ones and the main benefit is a better MER/cost structure. One example is VTSAX which is the admiral version of VTSMX.
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