Capital Gain Distribution
- You receive capital gain distributions when the fund sells some of its assets and then passes along a portion to you. This distribution that you get is regarded as a capital gain, not as ordinary dividends such as the interest you get from your bank account. It is important to separate capital gain distributions from ordinary dividends because capital gains are taxed more favourably. See also "Ordinary Dividends."
Related Terms and Acronyms
- Capital — Definition,
- Money that is used to make money; for example, to buy rental property or a business.
- Capital Gain (CG) — Acronym, Important,
- The profit made by the seller when real estate or other capital assets are sold. Capital gains are taxed more favourably than earned income. However, this can be dependent on your tax bracket and the length of time you owned the asset before it was sold. You could pay approximately one-third to one-half less tax than you would pay on the same amount of earned salary.
- Ordinary Dividends — Definition,
- The distribution of a company's profits that are subject to full taxation.