Personal Taxation Q 'n A

Why do I report income from my mutual funds every year even though I don’t receive anything?

For most individuals who own mutual funds, income earned within those funds is reinvested each year with the purchase of more units of that fund. In essence, you have received the income, but choose to immediately reinvest it. You can alternatively receive the income directly in the form of cash, but this may be detrimental to your long term financial planning objectives. You must note that this income however, serves to increase the cost base of your mutual funds.