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What is a Non-Registered Account?
A non-registered investment account (also called a taxable brokerage account) is a standard investment account with no government registration, no contribution limits, and no tax advantages. You can hold stocks, ETFs, bonds, and other securities — but unlike a TFSA or RRSP, any investment income is taxable in the year it's earned.
The lack of restrictions makes it the most flexible account type available — and despite the tax implications, it's the right tool once your registered accounts are maxed.
Open a non-registered account after you've maxed your TFSA and RRSP (and FHSA if applicable). Registered accounts always come first because of the tax benefits. The non-registered account is your overflow vehicle for additional investing.
How Taxes Work in a Non-Registered Account
Three types of investment income are taxed differently:
- Capital gains: When you sell an investment for more than you paid, only 50% of the gain is included in taxable income (the "inclusion rate" was increased to 2/3 for gains over $250K in 2024 budgets — consult a tax professional for your situation)
- Canadian dividends: Eligible dividends from Canadian companies receive preferential tax treatment through the dividend tax credit — often taxed at a lower effective rate than employment income
- Interest income: Fully taxed as regular income — least tax-efficient, so interest-bearing investments are better held in registered accounts
- Foreign (US) dividends: Taxed as regular income, with 15% withheld at source by the US — held better in an RRSP where the withholding tax doesn't apply
Non-Registered vs Registered Accounts
The non-registered account should be used after registered accounts are maxed. Here's how they compare:
- TFSA: Always first — completely tax-free growth and withdrawals. See the TFSA guide.
- RRSP: Tax deduction now, tax on withdrawal. Best for high earners. See the RRSP guide.
- Non-registered: No limits, taxable growth — use when registered room is full or for goals that don't fit registered accounts.
Best Investments for a Non-Registered Account
Given that different income types are taxed differently, tax-efficient investments are best suited here:
- Canadian dividend stocks and ETFs — eligible dividend tax credit reduces effective tax rate
- Growth ETFs — capital gains are only 50% included in income, and you only pay tax when you sell
- US dividend stocks — better held in an RRSP to avoid withholding tax, but still viable here
Avoid holding GICs or high-interest savings in non-registered — interest income is fully taxable. Those belong in your TFSA.
✅ Advantages
- No contribution limits
- No withdrawal penalties or restrictions
- Capital losses can offset gains
- Flexible for any financial goal
- No age restrictions or deadlines
❌ Limitations
- Investment income is taxable
- No tax deduction on contributions
- More complex tax reporting
- Less efficient than registered accounts