Each account has specific features and rules that dictate how they should be used. Most of the account types – called registered accounts – also have limited contribution room. The one account type that is unconstrained by contribution room is the taxable investment account.
Unlimited contribution room might sound great, but unlike a registered account a taxable investment account is fully exposed to taxes on investment returns. In this episode, we dig into the nuances of taxable investing.
“Growing your pot of after-tax money can help to hedge against some of that higher future income tax. If the income tax rates rise in the future, then tax deferral is not always a good thing.”
@LoonieDoctor
“In Canada, investment income is attached to individuals, rather than households. Even if you file your tax return with a spouse, there’s no joint tax return in Canada, everything’s attached to each individual.”
@benjaminwfelix
“The strategy of loaning money to a lower-income spouse or child [to avoid tax] is usually only worthwhile if the prescribed rate is low and the income yield is high. There’s got to be a positive difference between those two for this to be really attractive.”
@LoonieDoctor
“Risk-return characteristics of assets are different depending on the type of account that they’re in.”
@benjaminwfelix
