NON-REGISTERED

Non-registered accounts are typically the last of the investment accounts that you would invest in due to tax implications. In other words, once you have maxed out your RRSP and TFSA contributions then you would focus on a non-registered account. While you aren't as constrained in a non-registered account and have quick access to your money if you need it, there are different factors to take into consideration.

With a non-registered account any gains on the selling of investments will be taxable. However, unlike RRSPs and TFSAs, if you lose money on selling investments those losses can be applied to your capital gains to reduce taxes payable.

Capital gains are recognized when you sell an investment and the proceeds of sale exceed what it cost you to acquire it. The taxation applied to gain would be 50% of the total gain multiplied by your tax rate. 

eg. Bought 100 shares for $500. Sold the 100 shares for $1000. (Proceeds - Cost) = Gain) x 50% = Taxable gain x your tax rate 

                                                                                                                                                ($1000   - $500) = Gain of $500 x 50% = Taxable gain of $250

Capital losses are recognized when you sell an investment and the proceeds of sale are less than what it cost you to acquire it. This  loss can be carried forward to offset capital gains in the future or back 3 prior tax years if there were taxable capital gains gains. 

eg. Bought 100 shares for $750. Sold the 100 shares for $500.  (Proceeds - Cost) = Loss) x 50% = Taxable loss x your tax rate 

                                                                                                                                                ($500   - $750) = Loss of $250 x 50% = Taxable loss of $125

NOTE: THE EXAMPLES ABOVE ARE FOR ILLUSTRATIVE PURPOSES ONLY

Dividends are another form of investment income. If a corporation does pay dividends they are paid monthly, quarterly, semi-annually or annually. It is also taxable, but there are "gross-up" and dividend tax credit calculations available if the investments are held in Canadian companies. This "gross-up" and tax credit make them less tax friendly than a capital gain but more attractive than straight interest.

Interest income is the least tax friendly income as it is taxed as received. In other words, if you receive $500 in interest income, the entire $500 is added to your income at tax time.

One advantage of non-registered accounts is that if you borrow money or pay broker / trading fees those can be written off come tax time. Interest expense  on investments loans can be claimed and broker / trading fees are part of the calculation of capital gains and losses.