The return you earn on your investments is generally considered taxable income. However, most adults in Canada can hold some or all of their investments in a ‘ Registered ‘ plan to defer or eliminate tax on their investment incomes. The most familiar such plan is the Registered Retirement Savings Plan or RRSP, which has been available since 1957. Since then, a variety of related plan types has evolved, including the Spousal RRSP, Locked-In Retirement Account (LIRA), Registered Retirement Income Fund (RRIF) and Life Income Fund (LIF). Most recently, the Tax-Free Savings Account or TFSA was introduced in 2009. There is also a Registered Education Savings Plan (RESP) and Registered Disability Savings Plan (RDSP) available for children and disabled persons.

There are many rules which limit the amounts that can be contributed to these plans and when, how contributions and withdrawals are taxed, and what investments can be held in these plans. Generally, you can hold GICs, stocks, bonds and/or mutual funds in any of these plans, with certain restrictions. These rules change regularly, so it is important for your investment management advisors to continually re-educate themselves to ensure they know the current rules.