Q: In February of each year, iShares attributes a significant amount of Non-Cash Re-Investment of Capital Gains for the previous year for holders of CEW. For tax year 2018, it was about $0.533 per unit (roughly 4.3% of unit value). This increases my average cost, so when I sell it in my cash account, my capital gain is reduced (or loss is increased) an equivalent amount. I don't mind this too much in a taxable account.
1. However, If CEW is held in a registered account or a TFSA, am I correct in believing this non-cash reinvestment offers no advantage whatsoever?
2. Why don't these ETFs simply issue a cash distribution? That would benefit owners irrespective of which type of account the units are held in.
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Asked by Edward on April 02, 2019