RE:Do the math!I agree with the comment that you need to be strategic in your holdings of H&R. With the current special distribution having a large non-cash payment does cause a potential for taxes being paid prior to recovery.
A comment on your math:
The $10,000 inclusion leads to an increase in the adjusted cost base of the units held.
So in your scenario you would pay $5,000 tax, but the adjustment to the unit cost does not get taxed again as capital.
Buy 10,000 units at $9.40
Special dividend is declared of $0.60
Other income generated of $6,000 tax paid $3,000.
At this point your cost on the units moves from $9.40 to $10.00
Market goes on and the unit price moves to $10.10
Sell 10,000 units
unit price sold for $10.10
Cost of units $10.00
Gain 0.10
Under this scenario you would recover 100% of your taxes paid and would only be required to pay capital gains tax on money earned.