Nicholas Hui, P.Eng, Certified Financial Planner + MORE Mar 22nd
I’m decades from retirement. Do I really need to contribute to my RRSP? + MORE Mar 15th
I have stocks in my TFSA as well as some that are non-registered. I am at the point in my life (retired) now that I’d like to begin selling them and using the money. Do I sell from the TFSA account or just from the non-registered portfolio?—Catherine
TFSA versus non-registered withdrawals in retirement
Great question, Catherine. And like many of my answers, I would say it depends. First, a primer on how stocks are taxed.
How dividends are taxed
In a non-registered account, dividends are taxable each year, whether you withdraw them from the account or not. This includes reinvested dividends in a dividend reinvestment plan (DRIP).
The way dividends from Canadian stocks are taxed is a bit weird. If your income is low, they can actually save you tax. For an Ontario taxpayer with under $49,000 of income in 2023, for example, the tax rate is about minus 7%, after accounting for the Ontario dividend tax credit. So, for every dollar of Canadian eligible dividends, you can save around 7 cents of tax that would otherwise be payable…
