Stuart has a non-registered account and redeems his entire mutual fund units for $15,000.

For a non-registered mutual fund, reinvested distributions increase the investor’s adjusted cost base because the investor has already been taxed on those distributions when they were received. Stuart initially invested $10,000. The $2,000 of reinvested dividends is added to the adjusted cost base, making the total ACB $12,000. When he redeems the fund for $15,000, the capital gain is calculated as proceeds of disposition minus adjusted cost base: $15,000 minus $12,000 equals $3,000. Option C incorrectly ignores the reinvested dividends and treats the gain as $5,000. Option B is only the reinvested dividend amount, and Option A double-counts the dividend. The correct capital gain is $3,000.