When you invest outside a registered account (like a TFSA or RRSP), any income you earn is taxable. The main types are: interest income, eligible and non-eligible dividends, and capital gains. Interest from bank accounts, GICs, and bonds is taxed as ordinary income - fully included at your marginal rate. Eligible dividends from Canadian corporations benefit from the dividend tax credit, which reduces the tax you pay. Only a portion of capital gains is included in your income. Capital gains are often taxed more favourably than other investment income. Inside a TFSA, all investment income is completely tax-free. Inside an RRSP, income is tax-deferred until withdrawal.