Which account to draw down first

The conventional order — taxable, then RRSP, then TFSA — is a default rather than an answer. Four things override it, and for a dividend investor two of them usually do.

The standard advice is to spend non-registered money first, then the RRSP, and leave the TFSA for last, on the logic that the shelters should compound as long as possible.

It is a reasonable default. It is also wrong often enough that it is worth knowing what overrides it.

Why the default exists

Each account is taxed at a different moment:

Non-registered is taxed as it goes — dividends and interest annually, gains on disposition.
RRSP and RRIF are taxed on withdrawal, in full, as ordinary income.
TFSA is not taxed at any point, and a withdrawal restores contribution room the following January.

Spending the taxed-anyway account first leaves the sheltered ones to grow. The logic is sound as far as it goes.

What overrides it

Bracket smoothing. Income tax is progressive, so a level income across twenty years costs less than a low income for ten and a high one for ten. Someone who retires at 60 with a large RRSP, defers it, and then hits mandatory RRIF minimums at 72 on top of CPP and OAS can pay a higher rate at 80 than at 62. Deliberately drawing the RRSP down in the low-income years between retirement and 71 is often the single largest saving available, and the default order does the opposite.

The OAS clawback. RRIF withdrawals count as net income, and so does the grossed-up dividend. A TFSA withdrawal counts as nothing at all. Once income is near the threshold, the account that produces no reportable income becomes the most valuable one to spend from — which inverts the usual “TFSA last” rule exactly when it matters most.

Where the eligible dividends are. Holding Canadian eligible dividend payers in a non-registered account is efficient, because the dividend tax credit works there and nowhere else. Spending that account down first means selling the holdings whose location was working hardest for you.

What happens at death. An RRSP or RRIF is generally deemed disposed of in full on the death of the holder or the surviving spouse, taxed as income in one year, frequently at the top rate. A TFSA passes without that. A large RRIF left untouched out of tidiness can produce a substantially larger final tax bill than drawing it down would have.

The order that usually falls out

Not advice, and it depends on your bracket, your OAS position and your intentions:

Between retirement and 71, draw the RRSP deliberately, to fill low brackets rather than to meet spending. This is the window that closes permanently.
Once OAS begins, blend — enough RRIF to meet the minimum, topped up from TFSA rather than from anything that adds to net income.
Keep eligible dividends non-registered while the credit still exceeds the clawback cost, and reconsider once it does not.
Spend the TFSA when income is high, not when it is low. It is a valve for managing net income, which is the opposite of treating it as the last resort.

The one thing to avoid

Emptying the RRSP in a single year to “be done with it.” Nothing forces that, and it converts a decade of low-bracket withdrawals into one at the top rate. The mandatory schedule only ever requires the minimum.

Where to go next

General information, not advice. Tax treatment depends on your circumstances and can change. Verify figures against the CRA and issuer documents before acting.