The Lemon Fool

Special rules apply to existing investors when a fund becomes a
reporting fund for the first time. These rules allow the investor
to benefit from reporting fund status prospectively, even though
they acquired their shares at a time when the fund was not yet
a reporting fund. These investors can make an election in their
tax return to crystallise any unrealised gain (which is taxed
immediately as income). Provided they do so, their investments
in the fund are treated as separate holdings before and after the
change of status, so that their ongoing investment is not tainted
by the prior non-reporting period. No actual redemption and
reinvestment is required.