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Published November 3, 2022

Registered vs. Non-Registered GICs

Your savings grow tax-free in a registered GIC, but there are contribution limits. With a non-registered GIC, you can contribute as much as you'd like, but earnings are taxed.

There are many different types of guaranteed investment certificates (GICs) you can choose from, but figuring out where to hold your GIC is more complicated — especially when interest rates, and potential GIC returns, are rising.

Storing investments in a registered GIC could save you money come tax time. But choosing a non-registered GIC allows you to invest an unlimited amount of money and chase more returns.

To help you choose the best GIC for your financial goals, let’s explore the difference between registered and non-registered GICs.

What is a registered GIC?

A registered GIC is a GIC held in an account  registered with the Canadian federal government that allows you to grow your savings tax-free. Registered accounts include:

You won’t pay taxes on any interest earned on your GIC while it’s in these accounts, which can be especially advantageous if interest rates are rising and you’re able to invest a significant amount of money.

Registered accounts, however, have age limits when you can start contributing or withdrawing funds. You also need to be mindful of contribution limits. Make sure these limits align with your overall investment goals so you can avoid paying any penalties.

Pros and cons of a registered GIC

Pros

  • Your earnings are not taxed while the money is invested.
  • Higher potential earnings because your account is not taxed.
  • Ideal for long-term savings goals such as retirement or a child’s education.

Cons

  • Investors must be aware of contribution limits and age restrictions.
  • Some accounts (RESPs and RRSPs) are for long-term savings, so it can be difficult and costly to withdraw your funds if your GIC matures and you have other financial needs.
  • RESP contributions can only be used towards education expenses.

What is a non-registered GIC?

A non-registered GIC is essentially the opposite of a registered GIC. It’s a GIC that isn’t held in a special registered account. Non-registered accounts are not regulated by the government and don’t come with any tax breaks or incentives.

But also have no age restrictions or contribution limits to worry about.

Examples of non-registered GICs include:

Pros and cons of non-registered GICs

Pros

  • They’re typically more flexible than registered GICs. You may pay financial penalties for withdrawing funds before the term ends, but once your GIC matures, it’s easy to get the money.
  • No contribution limits.
  • No age restrictions.

Cons

  • All earnings are taxed and need to be claimed as investment income.
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How to choose between registered and non-registered GICs

Consider your savings goals. What is the money in the GIC for?

If your goal is something like retirement or a child’s education, a registered GIC in the appropriate account (RRSP or RESP) is likely a good idea. If you’re saving for a wedding or a down payment to buy a house in a few years, a registered GIC in a TFSA could be a good option.

Longer terms will give your money more time to grow, and registered GICs allow you to avoid paying taxes on your earnings. But don’t forget to keep an eye on your contribution room. If you’ve already maxed out your RRSP, TFSA or RESP for the year, choose a non-registered GIC so you don’t over-contribute and face penalties.

If you’re saving for a more immediate goal or an emergency fund, a non-registered GIC is probably a better bet, since they’re more flexible and it’s easier to access your money.

Remember that most GICs lock your money away for a set amount of time, so choose a term that matches your savings timeline so you can make the most of your GIC by leaving it alone until it matures. And if you’ve been avoiding GICs because of their typically low interest rates, now might be a good time to reexamine the rates currently being offered.

  • Frequently asked questions about registered vs non-registered GICs

    • What’s a good interest rate for a registered GIC?

      GIC interest rates vary based on term, type and financial institution. Compare today’s best GIC rates to determine which kind of GIC best fits your financial goals.

    • What's the difference between registered and non-registered GICs?

      Registered GICs are held in investment accounts registered with the federal government that receive unique tax advantages, like RRSPs or TFSAs. Non-registered GICs are held in non-registered accounts and do not receive the same tax benefits.

About the Authors

Clay Jarvis

Clay Jarvis is NerdWallet’s mortgage and real estate expert in Canada. Thus far, his entire professional writing career has revolved around real estate. Prior to joining NerdWallet, he was the editor and senior writer for four publications, including the leading website for the country’s mortgage industry, Mortgage Broker News. Clay has written 30,000-word examinations of Canada’s real estate investment market, interviewed the industry’s most powerful leaders and analysts, and has helped choose both the nation’s top realtors and mortgage brokers. He is based in Toronto, Ontario.

Hannah Logan

Hannah Logan is a writer and blogger who specializes in personal finance and travel. You can follow her personal travel blog EatSleepBreatheTravel.com or find her on Instagram @hannahlogan21.

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