Back to Learn TFSA & Non-Registered

Capital gains in a non-registered account, in plain terms

A non-registered account is only partially taxed — and that's what makes it a useful counterpart to your RRIF in retirement.

The 50% inclusion rate

•When you sell an investment for a gain, only half of the profit is taxed — the other half is tax-free.
•So a $10,000 capital gain adds only $5,000 to your taxable income.
•At a 30% marginal rate, that's $1,500 of tax on a $10,000 gain — an effective rate of just 15%.

You control when it's taxed

•Unlike a RRIF minimum, you choose when to realize a gain — by deciding when to sell.
•You can harvest losses to offset gains, and carry losses back or forward to other years.
•Interest and dividends from non-registered investments are fully taxed each year, though — only capital gains are deferred.

The deemed disposition at death

•When you pass away, non-registered investments are treated as sold at fair value — triggering a final capital gain.
•There are rollover reliefs to a spouse that can defer this until their death.
•Eligible dividends also get a dividend tax credit that lowers their effective rate versus interest income.

Mix in non-registered

The Sequencer draws non-registered before TFSA to keep income low while preserving tax-free room.