Ch.8 · Capital Gains Tax on Mutual Funds · hard
What is the tax implication of 'transferring' mutual fund units as a gift to a family member?
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EXPLANATION
Unlike shares (which can be gifted by off-market transfer), mutual fund units cannot be transferred between individuals except through the transmission process upon the unit holder's death. To 'gift' mutual fund investments, the donor must redeem (pay capital gains tax if applicable), gift the cash amount, and the recipient reinvests. This makes gifting mutual fund investments tax-inefficient compared to gifting equity shares.
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