Series T Calculator

If you want tax-efficient monthly cash flow from your investments, our Series T option might be for you. The cash flow that’s distributed through Series T is return of capital (ROC), which is not immediately taxable. Complete the fields below to see the benefits of Series T units of Empire Life Mutual Funds®.

Methodology, Assumptions and Disclaimers

Annual pre-tax cash flow rate is set at 6% or 8% of the initial investment in the illustrator and is used to calculate pre-tax cash flows in Series T units, Series A units and GIC instruments. These rates mirror the targeted annual distribution rate offered in our Series T units. Annual return of capital (ROC) distributions are reset each year to maintain the payout target. Please refer to the Empire Life Mutual Funds Simplified Prospectus for details.

Series T unit cash flows are assumed to be entirely comprised of ROC. Funds may distribute income and capital gains annually and these distributions are defaulted at 0.6% with the flexibility to be changed between 0 and 1% at the user’s choice in this illustrator. The annual distribution is assumed to comprise 50% interest, 30% dividend, and 20% capital gains.

Series A unit cash flows are assumed to match the cash flows of the investment in Series T units. Series A unit cash flows are generated through an annual Systematic Withdrawal Plan (SWP) that involves redeeming units. Capital gains associated with redeeming units are considered in this illustrator and taxed at 50% of marginal tax rate and is applied immediately on withdrawals. Funds may distribute income and capital gains annually and these distributions are defaulted at 0.6% with the flexibility to be changed between 0 and 1% at the user’s choice in this illustrator. The annual distribution is assumed to comprise 50% interest, 30% dividend, and 20% capital gains.

Cash flows from the GIC instrument are assumed to match the cash flows of the investment in Series-T. Default GIC interest rate is based on the average 5 Year GIC rates (Source: GIC Rates of various institutions: ‘Loans and Savings Rate Table’ compiled by Financial Post) and is currently at 2.21% as of July 8, 2013.

When the adjusted cost base (ACB) drops to zero, all subsequent distributions are treated as capital gains and taxed accordingly. It is the responsibility of the investor to calculate the ACB and capital gains or losses realized on sale of units. Any income and capital gains generated by the fund are distributed at the end of the year separately from the monthly ROC distributions.

Taxes are assumed to be at the chosen marginal tax rate. If a marginal tax rate is not provided, the highest marginal tax rate based on province of residence is applied.

Unrealized capital gains are the difference between market value and adjusted cost base. Taxes on unrealized capital gains are based on marginal tax rate entered in the illustrator. Effective tax rate = Total Taxes Paid / Total Gross Cash Flow

Disclaimers

This document is intended for illustrative purposes only. You should consult with your investment professional before making any investments.

The illustrator is a tool that shows the benefits of investing in Series T units based on assumptions selected by your investment advisor that are assumed to reflect your investment objectives and risk tolerances. This should not be construed to be tax advice, as each client’s situation is different. Please consult your own tax advisor.

The rate of return is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of the mutual fund returns on investment in the mutual fund.

Highest Marginal Tax Rates are based on year 2013 (Source CRA); Effort has been taken to ensure accuracy of this information; however, guarantee of accuracy is not made. The payment of distributions is not guaranteed and may fluctuate. The payment of distributions should not be confused with a fund’s performance, rate of return or yield. If distributions paid by the fund are greater than the performance of the fund, your original investment will decrease. Distributions paid as a result of capital gains realized by a fund, and income and dividends earned by a fund are taxable in your hands in the year they are paid. Your adjusted cost base will be reduced by the amount of any returns of capital. If your adjusted cost base goes below zero, you will have to pay capital gains tax on the amount below zero.