Last year, the Trudeau government took away one of the benefits of corporate-class funds, but this year, it’s made a small concession.

The federal government is changing the Income Tax Act’s rules to facilitate reorganizing corporate-class funds (also known as “switch funds”) into multiple mutual fund trusts.

Most Canadian mutual funds are structured as trusts, though they can be legally organized as either a trust or a corporation.

The Income Tax Act currently facilitates the tax-efficient reorganization of mutual funds, allowing economies of scale in the process and avoiding duplication of expenses. But the rules do not permit the reorganization of a mutual fund corporation into multiple mutual fund trusts.

Read: Don’t panic about corporate-class funds

The Liberal’s 2017 budget proposes to extend the mutual fund merger rules so they facilitate the reorganization of corporate-class funds into multiple mutual fund trusts, on a tax-deferred basis.

Doug Carroll, vice-president of tax and estate planning at Invesco, notes that investment managers have been looking at ways to reorganize such funds since last year’s budget, when the government eliminated the ability to switch tax-free between investment funds held inside the same mutual fund corporation.

Read: Mutual fund corporations lose tax advantage

“The problem that came up, in some places, would have been that the fund company might have wanted to break out the individual funds, each into its own mutual fund trust — but that wasn’t possible under the existing rules,” Carroll says. “[This change] makes the reorganization of mutual funds less of an issue.”

The federal budget plan says: “To qualify for this tax deferral, in respect of each class of shares of the mutual fund corporation that is or is part of an investment fund, all or substantially all of the assets allocable to that class must be transferred to a mutual fund trust and the shareholders of that class must become unitholders of that mutual fund trust.”

The new measure will apply to reorganizations that happen on or after March 22, the budget says.