Non-Registered Account

Total flexibility, zero shelter

A non-registered account (also called a taxable, cash or open account) is simply an investment account with none of the registered wrappers around it. There is no contribution room to track, no penalty for putting in too much, no minimum withdrawal, no age limit, and no rules about what the money must be used for. You can open as many as you like, alone or jointly, and move money in and out freely.

The trade-off is that nothing is sheltered. Interest, dividends and realized gains all land on your tax return each year, which is why the details of how each type of income is taxed become the heart of the subject.

How each type of income is taxed

Not all investment income is equal in a taxable account. Interest is the worst treated: 100% of it is added to your income every year and taxed at your full marginal tax rate. Canadian dividends get a gentler ride: the amount is grossed up on your return, then the dividend tax credit offsets the corporate tax already paid, leaving an effective rate well below the rate on interest for most incomes.

Capital gains are the most favourable: only 50% of a realized gain is taxable (as of July 2026), and nothing at all is taxed until you actually sell, so growth can compound untouched for decades. See capital gains tax for the mechanics. Foreign dividends get no special treatment: they are fully taxable like interest, and the source country may withhold tax first, for which you can usually claim a foreign tax credit.

You must track your adjusted cost base

Because capital gains are taxed on the difference between your selling price and your cost, you are responsible for tracking the adjusted cost base of everything in the account: your purchases averaged together, adjusted for reinvested distributions, return of capital and other events. Brokerage "book value" figures are a starting point, but they are often wrong when you hold the same fund at two institutions or when a fund pays return of capital, and the CRA holds you, not the broker, responsible for the number.

The paperwork: T5 and T3 slips

Each spring your account generates tax slips: a T5 slip for interest and dividends paid directly by banks and corporations, and a T3 slip for distributions from trusts, which includes most mutual funds and ETFs. T3s arrive weeks later than T5s, which is a classic reason investors with taxable accounts should not file their return too early.

When should you use one? The order of account filling

For most people the answer is: last. A TFSA shelters income completely, and an RRSP defers tax and adds a deduction, so the standard order is to fill both before investing a dollar in a taxable account. A non-registered account is the overflow tank for savers who have maxed out their registered room.

The honest exceptions: in very low income years an RRSP deduction is worth little, so filling the TFSA and simply waiting can beat contributing to either an RRSP or a taxable account. Business owners investing inside a corporation face a different calculus, since corporate savings cannot go into personal registered accounts without being paid out first. And money needed within a year or two for a known expense can sit in a taxable high-interest account if TFSA room is already spoken for; flexibility matters more than optimization at that horizon.

Asset location, briefly

If you hold both registered and taxable accounts, put the ugliest income where the shelter is. Interest-heavy assets like bonds and GICs benefit most from a TFSA or RRSP because interest is fully taxed; Canadian dividend payers and growth stocks tolerate a taxable account far better, thanks to the dividend tax credit and the deferred, half-taxed treatment of gains.

One caution for couples: in a joint account, income is taxed according to who contributed the money, and gifting a spouse money to invest triggers the attribution rules.