In this chapter, you will learn about the taxation issues for investors interested in hedge fund investing, the qualification requirements for hedge funds to be eligible for registered plans, and the foreign investment entity rules that affect hedge fund investors.

When you have completed this chapter, you should be able to:

• Identify the key Canadian federal income tax concerns for an investor in the three major types of hedge funds

• Explain the rules governing when a hedge fund investment is qualified for investment in certain registered plans

• Understand the foreign property and foreign investment entity rules that may affect hedge fund investments

The comments in this chapter are of a general nature and are not legal advice to any investor. Advisors should recommend that each investor read carefully the tax disclosure in the offering document for any hedge fund product and obtain specific advice from tax professionals for the investor’s personal circumstances. This chapter does not address any provincial income tax considerations.