When Lance switched his investment from a bond segregated fund, what tax consequence did it trigger?

When Lance switched his investment from a bond segregated fund, it triggered no immediate tax consequence, which is why the correct answer is that it resulted in a tax consequence of $0. This is primarily due to the nature of segregated funds and the tax treatments associated with them.

In Canada, segregated funds are structured so that the capital gains or losses are not recognized at the time of switching investments within the same policy. As a result, the switch does not lead to a taxable event, meaning that Lance does not incur any tax liability from the transaction at that moment. Taxes on any capital gains or income realized within the segregated fund are generally deferred until the funds are withdrawn from the contract or upon the maturity of the policy.

Understanding this feature is crucial for investors using segregated funds, as it allows them to manage their investments without facing immediate tax implications each time they decide to switch their investment allocations. This characteristic of segregated funds can be an advantage as it provides flexibility in investment decisions without the burden of triggering taxes unnecessarily.