What Investments Can I Hold in a Registered Account?

What can you hold in a registered account?

The Canada Revenue Agency (CRA) calls investments that are permitted to be held in registered accounts qualified investments. Generally, the ones that qualify are your typical investments—think cash in high-interest savings accounts, guaranteed investment certificates (GICs), publicly traded stocks, ETFs, mutual funds, and bonds.

Although rare, non-qualified investments can find their way into your account in ways you might not expect. Knowing what you can and can't hold in a registered account is important. 

While registered accounts offer valuable tax advantages, holding a non-qualified investment can turn those perks into penalties.

Here, we break down what non-qualified investments are in Canada, what can cause an investment to become non-qualified, and how to avoid getting caught off guard.

What types of assets can be held in a registered account? 

Here's a cheat sheet to some of the most common investment types and whether they qualify for registered accounts.

Asset type	Can you hold it in a registered account?	Examples
Cash and guaranteed investment certificates (GICs)	Yes	Cash deposits, GICs.
Publicly traded stocks	Yes	Shares listed on designated exchanges like the TSX, NYSE, or Nasdaq.
ETFs and mutual funds	Yes	ETFs and mutual funds that meet CRA requirements.
Government and corporate bonds	Yes	Federal, provincial, and many corporate bonds.
Private company shares	Sometimes	Some private company shares qualify, but only if they meet specific CRA rules.
Delisted or over-the-counter (OTC) securities	No	Securities no longer listed on a designated TSE 300.
Cryptocurrency	No	Bitcoin, Ethereum, and other cryptocurrencies held directly.
Cryptocurrency ETF	Sometimes	Crypto-based ETFs may qualify if listed on a designated TSE 300.
Real estate, art, and collectibles	No	Rental/investment properties, artwork, jewellery, collectibles.

The takeaway? The type of investment you own and where you put it matters. For example, you generally can't hold Bitcoin directly in a registered account. 

Still, you may be able to hold a cryptocurrency-based ETF that's listed on a designated TSE 300, such as the Toronto TSE 300 (TSX), New York TSE 300 (NYSE), or Nasdaq.

The same idea applies to real estate. While you generally can't buy a rental property inside a registered account, you can invest in certain qualifying real estate investment trusts (REITs).

How qualified investments can become non-qualified

Occasionally, an investment that was perfectly fine to hold in your registered account can stop qualifying later. Here are a few situations to watch out for.

A stock gets delisted

If a company is delisted, its shares may move to an over-the-counter (OTC) market—an alternative marketplace where securities trade outside the major stock exchanges. 

Should that happen, the investment may become non-qualified because OTC markets are not designated stock exchanges recognized by the CRA. 

However, there are some exceptions. Securities that trade on both an OTC market and a designated TSE 300 may still qualify. 

Company restructuring

Sometimes the investment you originally bought isn't what you end up holding.

Companies can merge, go private, reorganize, or distribute new securities to shareholders as part of a corporate action. 

In some cases, the new securities you receive may be shares of a private company or securities that are not listed on a designated exchange, which means they may not qualify to be held in a registered account—even if your original investment did.

For example, let's say one Canadian public company acquires another Canadian public company. Shareholders of the second company are given a choice: to receive common shares in the first company or to receive a different type of security that they could exchange for common shares anytime, but are not themselves qualified investments. 

If you receive new securities, it's worth reviewing them carefully to make sure they still qualify.

CRA penalty tax and costs of holding non-qualified assets

What happens if you hold a non-qualified investment? This is when things can get expensive. Here's what could happen:

• You could owe a 50% penalty tax. The CRA may charge a tax equal to 50% of the investment's fair market value (FMV) when you acquire the investment or when it becomes non-qualified. You'll need to submit a tax form for non-qualified investments, along with any balance you owe, by June 30 of the next year.
• The tax advantages may disappear. As long as the non-qualified investment remains in your registered account, any income or capital gains it generates may also be taxable. 
• You may be able to undo some of the damage. If you sell the investment or it becomes qualified again before the end of the following calendar year, you may be able to apply for a refund of the 50% tax if you meet the CRA's requirements.

Tax efficiency and cross-border investing

A TFSA, RRSP, RESP, FHSA, and non-registered account can all hold many of the same investments. The difference is how those investments are taxed. Here are a few considerations: 

• Cash, GICs, and bonds are often held in registered accounts because they primarily generate interest, which is taxed as income. Unlike capital gains, which are only partially taxable, interest income is generally fully taxable in a non-registered account.  

• Investments with long-term growth potential can benefit from the tax advantages of a registered account. Whether to use a TFSA, RRSP, FHSA, RESP, or another registered plan depends on your financial goals.

• Canadian dividend-paying stocks can sometimes be more tax-efficient in a non-registered account because they qualify for the dividend tax credit, which reduces how much tax you may owe. 

• Foreign investments, including U.S. stocks, can be held inside registered accounts. However, foreign governments may still withhold tax on dividends before they reach you. Still, the rules differ across accounts, meaning that some registered accounts, such as a TFSA, may be subject to the withholding tax on foreign investments, while others, such as the RRSP, are not. 

Investment	Often considered for	Why
Cash, GICs, and bonds	Registered accounts	You won't pay tax on the interest you earn each year while it stays in the account.
Investments with long-term growth potential	Registered accounts	Tax-sheltered or tax-deferred growth can help your investments grow over time.
Canadian dividend-paying stocks	Sometimes non-registered accounts	Eligible dividends may qualify for the dividend tax credit.
Foreign investments, including U.S. stocks	Depends on the account	Foreign withholding tax and other tax rules can affect your returns.

The best place to put an investment depends on your goals, income, and overall financial picture. But thinking about what you invest in and where you hold it can help keep more of your returns in your pocket.

A note about U.S. investments 

Investing in U.S. stocks comes with a few extra tax considerations.

The U.S. generally withholds tax on dividends paid to Canadian investors. However, the amount withheld can vary depending on the type of account you use. Thanks to a tax treaty between Canada and the U.S., Canadians with certain registered accounts, like an RRSP, may qualify for more favourable tax treatment than a TFSA. 

As a result, holding the same investment in two different accounts may result in different after-tax returns.

It's important to note that to benefit from this tax treaty, you need to have a current W- 8 BEN form on file with your brokerage. 

It certifies that you're a Canadian resident for tax purposes and that you're claiming benefits under the Canada-U.S. tax treaty, helping to ensure the correct US withholding tax rate is applied. The form is only valid for 3 years, so it's important to check from time to time if you need to renew.  

How to avoid non-qualified investments

A few simple habits can help you stay on the right side of the rules. Before you invest:

• Check that the investment qualifies. If you're unsure, review the CRA's guidelines or ask your financial institution before placing a trade.

• Keep an eye on your holdings. Companies change unexpectedly and affect whether an investment still qualifies for your registered account.

• Act fast if something changes. If an investment becomes non-qualified, selling or transferring it ASAP may help reduce the tax consequences or make you eligible for a refund of the 50% tax, provided you meet the CRA's conditions.

Get the most out of your investments

For most investors, qualified investments aren't something you'll think about every day. But knowing the rules can help you avoid costly surprises and preserve the tax advantages of your registered accounts.

A quick eligibility check before you invest—and an occasional review of your holdings—can go a long way toward helping your TFSA, RRSP, or other registered plan do what it's meant to do: help you build wealth more tax-efficiently.