TFSA or RRSP for dividend income.

The difference in one line

A TFSA removes the tax. An RRSP postpones it. Money in a TFSA has already been taxed and never will be again. Money in an RRSP was deducted going in and is taxed as ordinary income coming out — so an RRSP is a bet that your rate in retirement is lower than it is today.

What an RRSP does to these funds specifically

It erases their character. Outside a registered account, a distribution that is mostly return of capital and capital gains is taxed lightly and late. Inside an RRSP every dollar comes out as ordinary income at your full marginal rate, whatever it was on the way in.

That is a real cost for a fund like HYLD, which was 100% return of capital. Held outside, most of its distribution is untaxed for years. Held in an RRSP, all of it eventually comes out at the highest rate you pay.

What a TFSA does to them

Nothing, which is the point — and it means the tax advantage you were paying attention to stops mattering. Inside a TFSA a fund that is 100% return of capital and one that is 100% interest are identical. Rank on yield and total return there, not on tax character. What that ranking looks like.

The tax neither account can shelter

Foreign withholding. When a fund holds foreign companies, the source country takes its cut before the money reaches the fund — 15% on US dividends. Outside a registered account you claim it back as a credit. Inside a TFSA or an RRSP there is no Canadian tax to credit it against, so it is gone.

Of the funds here, LMAX (2.5%), EMAX (2.5%), RMAX (2.4%), SMAX (1.5%), AMAX (0.7%) give up some of the distribution this way inside a registered account. The other 5 hold no foreign companies and lose nothing.

The treaty exemption people cite does not help here. It applies to US-listed securities held directly in an RRSP; it does not reach through a Canadian-listed ETF holding US stocks, because the withholding happens inside the fund before your account is involved.

So where does what go

Registered room is finite, so the question is always which holdings would be punished hardest outside it. Roughly:

• Fully taxable income — interest, foreign, other — is the best use of shelter, because it has no tax advantage of its own to waste.
• High return-of-capital funds are the best candidates to leave outside, where the deferral is worth something and eventually converts into a half-taxable capital gain.
• Eligible Canadian dividends at a low income are already taxed very lightly, and in several provinces at a negative rate — using shelter on them is often waste. What your province charges.

None of that is a recommendation, and it depends on your income now versus later, which nobody can tell you. The mechanics in full.