My retirement savings1 are spread across multiple kinds of accounts: primarily RRIF, but there’s also TFSAs and non-registered accounts. Here’s today’s snapshot, courtesy of my multi-asset tracker:
For tax reasons2, about 2/33 of this year’s salary is actually funded by my non-registered accounts. But I hold a bunch of assets in both my and my spouse’s non-registered accounts, each with their own adjusted cost base, each in a position to generate a capital gain when sold, each representing a tax obligation for one of us. Assuming I’m trying to reduce CRA’s take, how do I decide which asset to sell at any given time?
Let’s start with some principles that I try to keep in mind as I work through that decision.
Principle #1: Try to equalize our taxable income
Why equalize? Because Canada’s tax system is graduated (i.e. it has tax brackets), the more you earn, the higher your overall tax rate is. It therefore follows that the minimal possible tax bill is generated when both members of the tax household make close to the same taxable income. A quick example: here I’m using the advanced Canadian Tax Calculator, and assuming that all income below is employment income, with no special deductions, and using Ontario as the location of the primary residence:
| My Income | My Tax Bill | Spouse’s Income | Spouse’s Tax Bill | Total Tax bill |
|---|---|---|---|---|
| 100k | 17.1k | 0 | 0 | 17.1k |
| 80k | 14.1k | 20k | .1k | 14.2k |
| 70k | 11.1k | 30k | 2.5k | 13.6k |
| 60k | 8.3k | 40k | 4.4k | 12.7k |
| 50k | 6.25k | 50k | 6.25k | 12.5k |
In each case (row) above, the total household income is 100k, but the lowest tax bill comes when each spouse is earning 50k. Equalizing the income makes for the smallest tax hit.
In retirement, income looks a bit different. Taxable income for our household comes primarily from four sources, which I summarize for you:
| Income Source | Me | My Spouse |
|---|---|---|
| Employment | Essentially 0 | not 0 |
| RRIF payments | Yes | Yes — the same as me4 |
| Capital Gains | Yes – variable | Yes – variable |
| Dividends, Interest | A bit | Even less |
| Total | RRIF + variable capital gains + a bit of dividend/interest | Employment + RRIF + variable capital gains + even less dividend/interest |
Employment and RRIF payments are known at the beginning of the year, and dividends and interest can be estimated within an acceptable range (they are small compared to other chunks of income, anyway). That leaves the capital gains portion of the income to worry about, and it’s variable because of course it depends on what I sell, when I sell it, and who gets the tax attribution.
What’s clear from my table above is that my capital gains attribution needs to make up for the extra income my spouse earns — an employment salary — if I want to meet my goal of equalizing our income.
Principle #2: Get rid of tax obligations early
I figure it’s better to pay taxes sooner rather than later. In the case of my non-registered assets, given that they are 100% equity, they are only going to grow (on average) over time and give me a larger tax liability down the road. And dying with non-registered assets is the worst from a tax perspective, since CRA treats that as a “deemed disposition”, meaning that dead you is effectively taxed as though you sold everything all at once. A tax time-bomb.
So to help with that, I not only track my adjusted cost base per unit for each asset I own, but I track the capital gain per dollar liquidated. Let’s look at some examples:
| Asset Symbol | ACB per share (A) | Current Price (B) | Capital gain/share (B-A) | Capital gain / Dollar (B-A)/B |
|---|---|---|---|---|
| HXS | 58.20 | 106.79 | 48.59 | .455 |
| HXT | 48.36 | 96.23 | 47.87 | .497 |
| HXDM | 39.12 | 64.43 | 25.31 | .393 |
- ACB per share: I track ACB of all my non-registered assets using adjustedcostbase.ca
- Current price: Current as of market close November 5, 2026 per googlefinance()
- Capital gain per share: The difference between the market price and my average cost. Your actual capital gain reported to CRA for a given “sell” transaction is this value multiplied the number of shares you sold.
- Capital gain per dollar: helps me decide which shares to liquidate. Higher means a higher capital gains for the same amount of money, meaning a higher tax liability. Since I’m selling shares with the intent of generating part of my retirement paycheque, knowing the capital gain for liquidating (say) $10000 of HXS is way more meaningful to me than knowing the capital gain involved in selling 100 shares. And it quickly gives me a way to quickly calculate the impact of a given sale on taxable income.
So if I needed $10,000 I could:
- Sell 93.64 shares of HXS and generate a capital gain5 of 10000*.455 = $4,550
- Sell 103.38 shares of HXT and generate a capital gain of 10000*.497= $4,970
- Sell 155.21 shares of HXDM and generate a capital gain of 10000*.393 = $3,930
You could say that selling HXDM is the correct approach since it generates the lowest amount capital gains, but I usually select the one with the worst outcome, in this case HXT. Why? Stocks tend to go up over time6, and I figure by trimming the biggest gains first will save me tax money in the long run.
What it effectively means
The strategy therefore becomes pretty easy to articulate: every tax year, sell assets in my non-registered account until such time as my taxable capital gains equal my spouse’s salary7. After that, try to finesse any remaining monthly payments so that our taxable incomes are (roughly) equal. I’m working on automating some of those calculations.
- You can read about how I classify what counts as retirement savings over here: What’s included in your “retirement bucket”? ↩︎
- My reasoning is to get rid of “extra” sources of income early in retirement, before CPP and mandatory higher RRIF payments kick in. And having fewer accounts to manage as I get older seems like a good idea, too. ↩︎
- 63% if you want to be exact ↩︎
- Both me and my spouse are the same age, and our RRIFs are very nearly equal in size. Score one for me on the planning side. ↩︎
- That’s raw capital gain, not taxable capital gain. For every $10000 my spouse earns, I get $20000 in raw capital gains to equalize. ↩︎
- Not steadily, of course, but I don’t claim to be able to predict near term futures. ↩︎
- This is only possible because my wife only works part time, so her salary contribution to the overall household income is modest. ↩︎
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Hi Rob:
Why do you have 11 accounts? Was it a result of experimenting /testing or investment advantage? Or was it an organic development? Are you going to simplify?
I could see 2 RRIFs; 2 TFSAs and and 3 unregistered (1 for each partner + joint)
Your wife still works. Does she have an RRSP?
I understand that moving funds from an RRSP to a RRIF has certain advantageous, but RRSPs don’t have a minimum withdrawal. Why did you convert all your RRSP funds to a RRIFs before age 71?
How does your asset allocation factor into the decision about what and how much to sell: What’s in my retirement portfolio (March 2026)? and https://moneyengineer.ca/2025/12/08/the-mechanics-of-getting-paid-in-retirement-2026-edition/
Thanks, Rob.
Hi Gregg!
Yes, eleven does seem a bit much, doesn’t it? Here’s the history:
– 4 of the RRIFs are understandable; each of us has a spousal RRIF and an individual RRIF. My spouse had highly variable salary throughout career, and in an effort to make sure each of us had the same amount stored up in our RRIF while taking advantage of RRSP contribution room led me down that path. The “extra” RRIF came about because I had a DPSP account that I couldn’t convert to an RRSP fast enough; and since I needed a new Mac, and Wealthsimple was handing them out to new clients, how could I resist? That account will probably disappear at some point.
– As TFSA accounts are individually held, having two as a couple would be “normal”
– The non registered accounts I suppose in theory could be streamlined but mentally they serve different purposes and make tax preparation a bit easier. My non-registered account is the oldest and is taxed fully in my name. My spouse’s non-registered account is much newer and was funded by a spousal loan which is a crude form of income splitting since gains are taxed in my spouse’s name. The joint account is for VPW’s cash cushion and any gains are 50/50 allocated. There isn’t a 2nd joint account, that’s a mistake on my part! So it’s 10 accounts, not 11.
My wife has an RRSP account but it’s unused and could be closed. I’ve hesitated doing so “just in case” since it costs nothing and would be convenient if for some reason my spouse needed it. I don’t see the need to continue to contribute to it at this point in time.
I converted everything to RRIF all at once for a few reasons:
– our combined RRSP assets were large, since neither of us has a defined benefit pension, and the looming tax bomb of the large RRSP/RRIF means that I needed to get started whittling it down before CPP/OAS kicks in. This was an idea I got from my advisor.
– withdrawing funds from an RRSP often comes with additional administrative fees; not so with a RRIF
– The mandatory withdrawal from the RRIF had a refreshing predictability to it, and one less decision to make
I could have chosen to do a partial RRSP/RRIF conversion, but I didn’t see the need to. For some people it might be a good option. The RRIF minimum isn’t actually enough to fund my retirement salary at this point in time, but it’s minimum for now since I wanted to avoid the paperwork of spousal attribution rules for RRIF withdrawals from spousal RRIFs in the first 3 years after contribution.
For a while, I was using my drift from target asset allocation as the primary guideline for choosing what asset to sell. I don’t anymore. Since trades at both my brokers are commission-free, my new strategy (see my latest post) is to focus on the assets with the largest capital gain per dollar, taking what I hope to be a smaller tax hit now versus a larger one down the road. If after making a non-registered sale my asset allocation has drifted too far, I can make trades outside the non-registered accounts to fix it. As I am lazy, I prefer to avoid making “extra” trades in my non-registered accounts because each of them generates some kind of tax paperwork.
Thanks for the questions, and thanks for reading!
Rob