What works in Canada

Tactical asset allocation after tax in Canada: the rules of the Taxable account, TFSA, RRSP, in plain words with sources, and what they cost 107 strategies over 2006 to 2026.

Version: 2.1
Published: 8 October 2026
Rules last checked: 22 October 2026

Non-registered (taxable) account

Half-taxed gains and loss carry-back keep the cost moderate; distributions are taxed in full.

Tax cost a year (median): 2.6 pts
Median strategy, before / after tax: 10.1% / 7.6%
S&P 500 held, after tax: 10.3%
60/40 after tax (worst fall): 7.5% (-19%)

23 of 107 strategies beat a 60/40 after tax in this account with a smaller worst fall; 14 beat the S&P 500 held throughout. Returns a year, in CAD.

The rules

Half of a capital gain is taxed at your marginal rate. Our investor lives in Ontario with taxable income of about CAD 120,000: 43.41%, so 21.70% on gains.
Capital losses offset only capital gains; a net loss carries back 3 years and forward without limit.
Superficial loss rule: a loss is denied if the same fund is bought within 30 days before or after the sale, and is added to the new cost. Cost is the average cost of all units held.
Distributions of US ETFs are taxed in full at 43.41% (no dividend tax credit); the 15% US withholding is credited.
Frequent trading can be treated as a business, with gains taxed in full: in our test the cost would rise from 2.6 to 4.3 points a year. The CRA gives factors, not a threshold.

Confidence in these rules: high. Checked 22 October 2026. Sources: Income Tax Act s.38 (taxable capital gain and allowable capital loss), current to 2026-09-30; CRA: Canadian income tax rates for individuals, current year (2026); Income Tax Act s.54 (definition of superficial loss).

Tax-Free Savings Account (TFSA)

Almost tax-free: only the US withholding on dividends.

Tax cost a year (median): 0.3 pts
Median strategy, before / after tax: 10.1% / 9.8%
S&P 500 held, after tax: 11.9%
60/40 after tax (worst fall): 9.1% (-17%)

36 of 107 strategies beat a 60/40 after tax in this account with a smaller worst fall; 24 beat the S&P 500 held throughout. Returns a year, in CAD.

The rules

No tax on gains, income or withdrawals. Room: CAD 7,000 for 2026, CAD 109,000 in total for an adult eligible since 2009.
US-listed ETFs are qualified investments, but the 15% US withholding on their dividends is lost: the treaty exemption covers retirement plans, not a TFSA.
Carrying on a trading business inside a TFSA makes it taxable; the CRA gives no threshold, so very active trading is a risk.

Confidence in these rules: high. Checked 22 October 2026. Sources: CRA: MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and YAMPE; CRA Income Tax Folio S3-F10-C1 Qualified investments (RRSPs, RESPs, RRIFs, RDSPs, TFSAs, FHSAs); Income Tax Act s.146.2 (TFSA), incl. subsections (6) and (6.1).

Registered Retirement Savings Plan (RRSP)

No tax and no US withholding inside; the tax comes at withdrawal.

Tax cost a year (median): 0.0 pts
Median strategy, before / after tax: 10.1% / 10.1%
S&P 500 held, after tax: 12.2%
60/40 after tax (worst fall): 9.5% (-16%)

31 of 107 strategies beat a 60/40 after tax in this account with a smaller worst fall; 26 beat the S&P 500 held throughout. Returns a year, in CAD.

The rules

Contributions are deductible (2026: 18% of earned income up to CAD 33,810) and withdrawals taxed as income. With the same rate at both ends, the untaxed growth shown is also the after-tax result.
No tax inside, and trading listed ETFs inside is not taxed as business income.
US dividends paid to an RRSP are exempt from US withholding under the Canada-US treaty.

Confidence in these rules: high. Checked 22 October 2026. Sources: CRA: MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and YAMPE; CRA Guide T4040 RRSPs and other registered plans for retirement; CRA Income Tax Folio S3-F10-C1 Qualified investments (RRSPs, RESPs, RRIFs, RDSPs, TFSAs, FHSAs).

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How this was computed, the limits, and every other country are in the full study.