Mutual Fund Trusts: A Powerful Tool for Tax-Efficient Investing in Canada

/in /by


Private equity investors and fund managers alike are increasingly turning to Mutual Fund Trusts (MFTs) as part of their investment structuring strategy — and for good reason. These trusts offer a unique blend of flexibility, tax efficiency, and investor appeal, making them an ideal tool to pool capital while minimizing tax drag.

What Is a Mutual Fund Trust?

A Mutual Fund Trust is a flow-through investment vehicle recognized under the Income Tax Act (Canada). Unlike a corporation, an MFT does not pay income tax at the trust level if it distributes all of its income to unitholders annually. Instead, the tax burden flows through to the individual investors, enabling deferral or efficient treatment of gains depending on their own tax profile.

Why Use an MFT in Private Equity?

  • Tax-Deferred Growth: Canadian investors can benefit from the capital gains treatment and other flow-through advantages.
  • Ease of Pooling Capital: MFTs allow for multiple investors to pool funds in a legally recognized trust governed by a trustee and trust declaration.
  • Professional Management: A trustee or manager oversees the trust’s investment strategy, ensuring operational and fiduciary oversight.
  • Attractive to Institutions: MFTs are familiar to many institutional investors and RIAs, making fundraising easier.
  • Eligible for RRSP/TFSA Investment (if qualified): Certain MFTs can be structured to qualify as “registered plan eligible” — a huge bonus for retail investors.


Typical Use Cases

  • Dual-structure deals where the MFT holds LP interests
  • Real estate funds
  • Private lending vehicles
  • Alternative asset strategies (e.g., private credit, venture capital)


Regulatory Considerations

To qualify as a Mutual Fund Trust under the ITA, certain conditions must be met:

  • The trust must have 150+ unitholders within 12 months of its first year-end.
  • It must be widely held and publicly distributed, subject to specific structuring techniques to achieve compliance.
  • It must restrict investments to qualified securities unless exemptions are met.

At Rabideau Law, we regularly advise clients on how to structure their investment vehicles using MFTs, whether as standalone products or paired with Limited Partnerships for added flexibility.


Want to set up a Mutual Fund Trust or learn how it can fit within your investment structure?

Contact Rabideau Law to get started with a custom legal strategy that meets your fundraising goals while staying tax-smart.

Why the LP/GP Structure Is the Gold Standard in Private Equity

/in /by


When it comes to launching a private investment fund, one structure stands out: the Limited Partnership (LP) with a General Partner (GP). It’s flexible, investor-friendly, and — when done right — highly tax efficient.

At Rabideau Law, we help clients build these structures from the ground up to raise capital, protect the general partner, and stay compliant with Canadian tax and securities law.


What Is an LP/GP Structure?

A Limited Partnership consists of two types of parties:

  • General Partner (GP): Manages the day-to-day operations of the fund and assumes liability.
  • Limited Partners (LPs): Passive investors who provide capital but do not participate in management.
    Their liability is limited to their investment.


The GP is often set up as a corporation to shield personal liability — something we strongly recommend and assist with at Rabideau Law.


How It Works (Simplified Flow):

  1. LPs contribute capital
  2. GP deploys the capital into selected investments (e.g., real estate, startups, private companies)
  3. Profits (or losses) flow back through the LP, with distributions typically favoring the LPs until a preferred return is achieved

This setup allows for:

  • Tiered distributions
  • Management fees
  • Carried interest (performance-based profit for the GP)


Why Investors Prefer It

  • Limited liability: LPs are protected
  • Tax efficiency: Pass-through entity, no double taxation
  • Flexibility: Tailored terms in the Limited Partnership Agreement
  • Credibility: Professional investors recognize and respect this structure


Why the GP Matters

The GP plays a critical legal and operational role. It must:

  • Be properly formed (often as a corporation)
  • Be indemnified in the Limited Partnership Agreement
  • Have clearly defined rights and duties

Rabideau Law regularly drafts LP Agreements that reflect your deal terms while ensuring the GP is protected.


Common Use Cases for LP/GP Structures

  • Private equity funds
  • Real estate syndications
  • Venture capital pools
  • Family office funds
  • Joint ventures with third-party investors

Ready to Start? We’re Your Legal Partner.

Whether you’re launching your first fund or expanding an existing one, Rabideau Law provides:

  • GP/LP entity formation
  • Limited Partnership Agreements
  • CRA registration
  • Ongoing legal guidance


Book your strategy call today. Build it right, from the ground up.

What Is Private Equity, and Why Is It Booming in Canada?

/in /by

Private equity isn’t just a buzzword thrown around on Bay Street — it’s a powerful investment model that’s reshaping how Canadians build wealth, fund businesses, and diversify portfolios.

At Rabideau Law, we help clients cut through the complexity and launch investment structures designed for long-term success. Whether you’re an entrepreneur raising capital or an investor seeking returns beyond the stock market, understanding private equity is the first step.

What Is Private Equity?

Private equity refers to capital investments made directly into private companies — companies that are not publicly traded on a stock exchange. Investors provide funds in exchange for ownership, often through structured vehicles like limited partnerships (LPs) or mutual fund trusts (MFTs).

These investments are typically:

  • Illiquid (not easily sold)
  • Long-term
  • Higher risk, higher reward

Why Is Private Equity Booming in Canada?

1. Low Interest Rates & Market Volatility

Traditional investments (like bonds or index funds) haven’t been yielding high returns. Private equity offers a compelling alternative — one where investors have more control and upside.

2. Tax-Efficient Structures

Canadian law supports tax-efficient entities like LPs and MFTs. Investors can defer taxes or reduce exposure through customized structures — something we regularly advise on at Rabideau Law.

3. Innovation & Startups

Canada’s startup ecosystem is thriving. From tech to real estate, private equity is fueling the next generation of growth.

4. Institutional Momentum

Pension funds, family offices, and HNWIs are allocating more to private equity than ever before. This trend is trickling down to emerging fund managers and experienced entrepreneurs alike.

How Can You Participate?

To get involved, you need more than capital — you need the right legal structure to protect your interests, attract investors, and stay compliant with tax and securities laws.

The most popular structure? The LP/GP model — which we’ll explore in detail in our next blog.

How Rabideau Law Can Help

We’ve helped clients across Canada structure:

  • Private equity funds
  • Real estate syndications
  • Mutual fund trusts
  • Cross-border investment vehicle

Let us help you build the foundation — from setting up the GP to drafting your Limited Partnership Agreement to registering your Mutual Fund Trust with CRA.

Book a consultation today. Let’s turn your vision into a fund.