Registered vs. Non-Registered

In very general terms, investments can be categorized into types: registered and non-registered. Investments in these two types of accounts can have very different and significant impacts on your tax situation. They will each be discussed at length in the sections that follow.

"Registered" Explained

“Registered” is a term used for savings plans and accounts that are registered under, and in compliance with, the federal Income Tax Act and Quebec’s Taxation Act. All registered savings vehicles are essentially investment accounts that allow the assets to grow in a tax-sheltered manner. That is, investment income is generally not taxed.

While some registered savings vehicles are designed to help Canadians save for their retirement years, others have very different objectives. The important point to remember is, each one has specific and often unique tax advantages. Learn to identify these differences and you will better be able to choose the best registered savings vehicle to suit your needs.

  • Registered pension plan (RPP)
    • Defined contribution (DC) pension plan
    • Defined benefit (DB) pension plan: in truth, not an investment account, unless you terminate it and transfer the value out of your employer’s plan. Pays a monthly benefit once eligible.
  • Deferred profit sharing plan (DPSP)
  • Registered retirement savings plan (RRSP)
    • Personal
    • Spousal
    • Group: employer sponsored
  • Tax Free Savings Account (TFSA)
  • Registered education savings plan (RESP)
  • Registered disability savings plan (RDSP)

Non-Registered

The term "non-registered" may be used to describe any investment account that that is not registered. The income (such as, interest and dividends) is taxed when received or accrued. Capital gains, realized when an investment is disposed of, are taxable. However, the money originally invested is not.

Examples of non-registered investments include stocks, bonds, mutual funds and guaranteed investment certificates (GICs) that are held in a “cash”, “open” or “investment” account with a brokerage, bank, investment management firm or other financial institution.

“Non-registered" may also be applied to other assets or investments. Investment real estate is an example. A non-registered savings plan through an employer may be in the form of an employee stock/share purchase plan (ESPP), whereby, using payroll deductions, employees are able to purchase shares of their employers’ stock.

Some examples of non-registered accounts, investments and other assets include:

  • Saving and investment accounts
    • Bank chequing and savings accounts
    • Term deposits
    • Cash/trading accounts (such as, holding stocks or mutual funds not held in a registered savings plan)
    • Non-registered investment accounts, including employee share purchase plans
  • Other assets and investments
    • Real estate
      • Your home
      • Recreation property
      • Investment real estate (rental properties)
    • Farms and small businesses
    • Land
    • Personal collectibles (such as art and antiques)
    • Other assets (such as precious metal)

For examples of other types of investment vehicles, check out Types of Investments: Alternatives.

 

Which Is Better?

To compare the differences between RRSPs, RESPs, TFSAs and non-registered accounts, check out Prioritize Savings Vehicles.

Taxable vs. Tax-Advantaged Investments

How taxes are applied to an investment can make an incredible difference to your after-tax return. Use the calculator below to compare a normal taxable investment (non-registered) with a tax-deferred (registered) investment such as an RRSP and a tax-free investment like a TFSA. See Investment Accounts & Your MTR for more information.

Taxable vs. Tax Advantaged Investments Calculator

How taxes are applied to an investment can make an incredible difference. This calculator is designed to help compare a normal taxable investment to two common tax advantaged situations: an investment where taxes are deferred until withdrawals are made, and an investment where taxes are paid on money that goes into the account, but all withdrawals are tax free.


Information and interactive calculators are made available to you only as self-help tools for your independent use and are not intended to provide investment or tax advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.