Non-Registered Investing
Investing outside a registered account. No contribution limits, full flexibility, but no tax shelter on what you earn along the way.
What it is
A non-registered investment account, sometimes called a taxable or open account, is simply a regular investment account that isn’t a TFSA, RRSP, FHSA, RESP, or other registered plan. It can hold the same range of investments, stocks, bonds, mutual funds, GICs, ETFs, but without any of the tax sheltering those registered accounts provide. Once you’ve used up your registered contribution room, or for money you want to invest without those restrictions, a non-registered account is usually the next option.
Eligibility, contributions & withdrawals
There’s no eligibility requirement, contribution limit, or withdrawal restriction on a non-registered account. It’s simply a regular investment account, open to anyone, with full flexibility to contribute or withdraw at any time without affecting registered contribution room.
Tax treatment
This is where non-registered investing differs most from registered accounts: everything is taxed as it’s earned or realized, in the type most favourable to the income in question. Interest income is fully taxable at your marginal rate. Canadian dividends receive a dividend tax credit that generally reduces the effective tax rate compared with interest. Capital gains are only taxed on realization, when you sell, and only a portion of the gain is included in taxable income, generally the most tax-efficient type of investment income outside a registered account. There’s no tax deferral the way an RRSP offers, and no tax-free growth the way a TFSA offers. Tax is calculated each year based on what was actually earned or realized.
Benefits, risks, and common misunderstandings
No contribution limits and no withdrawal restrictions. Full flexibility for money beyond your registered account room.
No tax sheltering at all; interest, dividends, and realized capital gains are all taxable in the year they’re earned or realized.
Capital gains and Canadian dividends receive more favourable tax treatment than interest income, which can be managed through what you hold.
Achieving that favourable treatment requires attention to what types of investments and income you hold. A portfolio weighted toward interest income, like most GICs and bonds, doesn’t get the same advantage.
You control exactly when to realize a capital gain, and the resulting tax, by choosing when to sell.
That same flexibility means poor tax planning, like selling appreciated investments in a high-income year, can create an avoidable tax bill.
A common misunderstanding corrected: a non-registered account isn’t a worse choice to be avoided.
Once registered room is used up, a non-registered account is often the only way to keep investing. It isn’t worse, just differently taxed.
Registered vs. Non-Registered
| Registered (TFSA / RRSP / FHSA) | Non-Registered | |
|---|---|---|
| Contribution limit | Set annually/lifetime by account type | None |
| Tax on growth | Sheltered. Tax-free or tax-deferred, by account | Taxed annually as earned or realized |
| Withdrawal flexibility | Varies by account; some restrict qualifying use | Full flexibility, any time |
| Best suited for | Money within your available registered room | Money beyond registered room, or needing full flexibility |
For business owners
The same principle applies at the corporate level: a corporation’s non-registered investment account is taxed on interest, dividends, and realized capital gains each year, which is central to the comparison on our Retained Earnings & Investment Planning page. The personal tax rules described here don’t apply directly to a corporation. Corporate investment income has its own, separate tax treatment.
Frequently asked questions
Should I max out my TFSA and RRSP before investing non-registered?
Are capital gains always taxed at the same inclusion rate?
Can I hold the same investments in a non-registered account as in a TFSA?
Does a non-registered account need to be reported differently at tax time?
What about foreign investments in a non-registered account?
Wondering whether a non-registered account makes sense alongside your corporate investment planning? Book a strategy consultation →