Crunchy Tax Optimization Questions [Podcast]

Today, we focus on the tax moves that actually matter (and the ones that waste your time), especially if you’re sitting on big unrealized gains in a non-registered account. The big takeaway: build your plan and investment strategy first—then optimize taxes, not the other way around.

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You’ll Learn

The “3 D’s” of tax optimization (what really moves the needle):

Defer: delay taxes so your money compounds longer.
Divide: split income where possible (spouse, retirement income splitting, etc.).
Deduct: use deductions strategically in accumulation years (hello RRSP).

Why “tax-first investing” can backfire

Avoiding taxes at all costs can push you into higher fees, weaker products, or a portfolio that no longer matches your goals—saving pennies while losing dollars.

The big non-registered problem: large unrealized capital gains

The “never sell” habit can create portfolio risk (overconcentration) and a tax bomb later (forced selling or your estate paying the bill).
Selling everything in one year can spike your taxable income and trigger unnecessary tax.

Practical ways to manage large gains without wrecking your plan

Trim gradually over time (instead of one big sell-off).
Harvest losses to offset gains (with proper timing rules).
Consider selling in a lower-income year (especially around retirement transitions).

Asset location basics: what to hold where

Non-registered accounts often work best for growth/capital gains (taxes are deferred until sale).
Interest income is usually least friendly in non-registered accounts.
Canadian dividends in non-registered can be more efficient due to tax credits, but the “tax-free $30–45K dividends” idea only works in very specific low-income scenarios.

TFSA positioning (and the US dividend withholding reality)

You can hold almost anything in a TFSA, but US dividends are subject to withholding tax (often 15% after a W-8BEN).
US dividend-heavy holdings are generally more efficient in RRSP/RRIF-type accounts due to treaty treatment.

Retirement withdrawal order: the “default” answer and the real answer

The rule of thumb is often non-registered ? RRSP/RRIF ? TFSA, but in real life it’s usually a mix—with the main goal being a smooth lifetime tax rate.

When to do an “accounts cleanup.”

Don’t wait until five years before retirement. The best time is whenever your life changes (new job, marriage, divorce, house, kids) and whenever your long-term projection needs an update.

What Mike wants you to stop doing immediately

Stop treating tax optimization as the main objective. Projection first ? strategy second ? taxes third.

Want to Get Ready for Retirement?

Retirement Loop is a community of over 500 Canadians who are in or nearing retirement. We have developed tools, including the RL Projections Tool, to help them navigate the transition and remain confident once they arrive. There is also a lot of power in having hundreds of people working with the same program to help each other. You can finally connect with other retirees going through the same challenges.

Canadians who enjoy their retirement:

Know which account to withdraw from first.
Build a clear financial plan covering multiple scenarios.
Use an agile budget through the go-go, slow-go, and no-go phases.
Create multiple sources of income, including CPP, OAS, investment income, and others.

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