By Pankaj Babbar, licensed advisor at SAI Insurances · 3 min read
1-minute read
The short answer
- Registered accounts (RRSP, TFSA, FHSA, RESP) come with tax advantages — and contribution limits set by the CRA.
- Non-registered accounts have no contribution limits, but investment income is generally taxed each year or when you sell.
- Most people fill registered room first, because the tax break is hard to beat.
- Non-registered accounts make sense once that room is used, or for goals that don't fit the registered rules.
- Different types of income (interest, dividends, capital gains) are taxed differently in a non-registered account.
Detailed guide · 2 min read
Think of accounts as containers
An investment — a GIC, a mutual fund, an ETF — is what you own. The account is the container you hold it in. "Registered" means the container is registered with the government and gets special tax treatment. "Non-registered" means it's an ordinary account with no special tax status.
The registered family
- RRSP — deduction now, tax later, for retirement.
- TFSA — no deduction, tax-free growth and withdrawals.
- FHSA — deduction going in, tax-free out for a first home.
- RESP — education savings with a government grant.
Each has CRA contribution limits, and rules on how and when money can come out.
How non-registered accounts work
A non-registered account has no contribution limit and no restrictions on withdrawals. The trade-off is tax: interest is generally taxed every year, eligible Canadian dividends get preferential treatment, and capital gains are generally taxed only when you sell — and only partly. Keeping good records of what you paid matters.
Side by side
| Registered | Non-registered | |
|---|---|---|
| Tax on growth | Sheltered (deferred or tax-free) | Generally taxable |
| Contribution limits | Yes, set by the CRA | None |
| Withdrawal rules | Vary by account | Flexible |
| Best for | Retirement, home, education, tax-free savings | Savings beyond your registered room |
A sensible order
For many families, the order is: use the registered accounts that match your goals first, then put extra savings into a non-registered account. Which registered account comes first depends on your income and plans — see RRSP vs TFSA.
Where you hold each investment can matter
Because different income is taxed differently, some investors place interest-paying investments inside registered accounts and growth-oriented ones outside. It's a detail worth discussing once your savings grow.
How we help
We look at the room you have, your goals and your tax picture, then suggest which accounts to use and in what order. See our investments overview and non-registered investments page, or ask us in English, Hindi or Punjabi.
This article is general information, not financial or tax advice. Tax rules and contribution limits are set by the CRA and can change, and how investment income is taxed depends on your situation — your advisor and tax professional confirm what applies to you.