Non-Registered Account

A non-registered account is a standard investment account that doesn’t come with any of the tax advantages of accounts like TFSAs, RRSPs, or FHSAs. You’ll sometimes hear it called a taxable account, a cash account, or simply an open account. It’s “non-registered” because it isn’t registered with the Canadian government for special tax treatment.

How taxes work

In a non-registered account, you’ll owe taxes on your investment income each year. Dividends, interest, and capital gains are all taxable. The specific tax treatment depends on the type of income. Canadian dividends get a tax credit that lowers the rate. Interest is taxed at your full income tax rate. Capital gains are taxed at 50% inclusion (meaning only half the gain is added to your income for the first $250,000 in gains per year).

You’ll receive tax slips (T3 or T5) for any income earned in the account, even if you reinvested it.

Why you might use one

Most people start with a TFSA or RRSP, and that makes sense. But once you’ve maxed out your registered accounts, a non-registered account is the natural next step. Our guide on what to do after maxing your registered accounts walks through the options. There are no contribution limits, no withdrawal restrictions, and no rules about what you can hold. It’s also the only option for certain strategies like tax-loss harvesting, where you sell losing investments to offset gains and reduce your tax bill.

A concrete example

Say you hold $80,000 in a non-registered account and receive $2,400 in eligible Canadian dividends and $1,200 in capital gains during the year. The dividends qualify for the dividend tax credit, so the effective tax rate is lower than your regular rate. The capital gains are taxed at 50% inclusion, meaning only $600 gets added to your income. You’ll get a T5 for the dividends and a T3 or T5008 for the gains, and you report both on your return even if every dollar was reinvested.