The Money Mustache Community
Around the World => Canada Discussion => Topic started by: erp on April 10, 2018, 02:00:32 PM
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Hi all, I'm approaching the point where I'll have maxed out my TFSA and RRSP in the next year or so. This seems like a pretty good place to be, and I'm thankful to all the more active forum members for giving good advice over the years.
I bought a house a few years ago and took a 25k loan from my RRSP via the first time home buyers program. I can pay (myself) back early, or I can invest that money in my non-registered account. Either way it will be the same ETFs as per my asset allocation. Is there a rule of thumb to determine whether the tax deferred growth in my RRSP would be more effective than the capital gains growth in non-reg? My gut feeling is that non-registered is better, but the assumptions are pretty important for 20+ years out.
Thanks,
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rule of thumb? Capital gains are 100% taxable upon withdrawal from an RRSP, 50% taxable from a non-registered account.
I would go the non-registered route, but beware that taxes are owed on the dividends that are spun off in the year they are paid out. Dividends are 100% taxable, but some Canadian dividends are eligible for the federal dividend tax credit. This is why asset location is critical for a tax optimized portfolio. You should purchase your Canadian fund ETF allocation in your taxable account as first priority.
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You're correct... Non-reg is better. You can use swap ETFs to be very tax efficient. HXS.TO for US stocks and HBB.TO for bonds.