Non registered investments are different from registered investments only in that growth is taxed as it happens, depending on whether the investment provides capital gains, dividends or interest. Each type provides its own tax structure, some better than others.

Capital Gains

Are effectively the growth on a specific type of investments. The capital gain inclusion rate in Canada is currently 50%.

Dividends

An amount distributed out of a corporation's retained earnings (accumulated profits) to shareholders. Dividends on preferred shares will usually be for a fixed amount. Dividends on common shares may fluctuate depending on the profits of the company. Dividends are generally grossed up by either 125% or 145%, depending on whether or not they are eligible or ineligible.

Interest

Is the most inefficient form of growth. Every dollar that the original investment grows is taxable compared to 50% of growth in capital gains, 25% to 33% in dividends. The type of investment vehicles that generates interest are Daily interest savings, GIC, Bonds.

Capital Gains

Dividends

Interest

Non-Registered investment savings

If you have non-registered investments, you can use this money to supplement your income. BMO Term Investments and BMO Mutual Funds can be structured to pay you an income on a monthly, semi-annual or annual basis, depending on the type of investment you choose.

Note: If you have both registered and non-registered investments, it is better to generate the income you need from non-registered investments before converting your RSP into a RIF (if you have not reached age 71). This allows you to continue to tax-shelter your RSP funds until they are needed.