What is the difference between a registered fund and a non-registered fund?

• A. There is no tax difference.
• B. A registered fund sits inside a registered plan with tax advantages; a non-registered fund is held outside such plans and distributions are taxed in the year paid.
• C. A registered fund is taxed annually, while a non-registered fund only at sale.
• D. Registered funds do not allow withdrawals; non-registered funds do.

Answer: (B)

Tax treatment is the main idea. A registered fund is held inside a registered plan (such as RRSP, RRIF, RESP, or TFSA), which brings tax advantages: in many cases you get tax benefits up front or tax-free growth, and the investment earnings inside the plan are sheltered from tax until you withdraw (with TFSA, withdrawals are tax-free). A non-registered fund sits outside any registered plan, so there’s no tax shelter—the distributions or investment income are taxed in the year they occur, and gains are taxed when realized. That contrast is exactly what the statement is capturing: a registered fund sits inside a registered plan with tax advantages; a non-registered fund is outside such plans and distributions are taxed in the year paid.