Wealthsimple wants to make sure that client portfolios are optimized from a tax perspective.

Registered accounts and non-registered accounts have different tax treatment for different holdings. In particular, the government of Canada taxes dividends and interest income in non-registered accounts but not in registered accounts (e.g. RRSPs or TFSAs). As a result, it is more important to minimize the amount of these distributions in non-registered accounts than in registered ones, so as to maximize after-tax returns.

In addition, certain accounts are subject to U.S. withholding tax (TFSAs and non-registered accounts) while others are not (RRSPs). If you have an account that would be subject to this tax, it’s important to avoid investing in international (non-U.S.) exposures through U.S.-listed ETFs, in order not to have to pay extra tax.