Financial Channel

From a taxation stand point, which is the better option?
I guess from a consumer stand point the ISAs probably pay better?

Is it better for me to park my money in something like an ING Direct Investment Savings Account or something like a TD Canada Trust Money Market Fund?

Are they seen as different things the Canada Revenue Agency?

As of today, both accounts you mention are paying the same. ING is at 3.15% and the TD Money Market Fund is at 3.14% - I have some cash in both by the way, but can't comment on the tax issue as the Money Market Fund is in my RRSP, so is not taxable.

I'm thinking that the tax rules would be different for both, since ING Direct is considered a bank so their interest would be treated as any other, which I think it just part of your income.

However, the TD Money Market Fund would be a Mutual Fund and so it'd be categorised as an investment, right? Thus, wouldn't it have different taxation rules either higher or (hopefully) lower?

One's "Interest from Canadian sources" and the other can be labelled as "Other Income", but they're both subject to a 100% inclusion rate.

This is correct. Since both ISA and MMF provide interest income, both will be taxed at 100%. So from a taxation perspective, there would be no difference.

ISAs are typically no-fee. MMF may involve a sales charge.
ISAs can be accessed from ATM. MMF takes more work to get to.
ISAs have CDIC insurace. MMF doesn't (but for all intents & purposes, MMF is safe enough unless you're talking about lots of $$$ - in which case, CDIC only covers up to $100K per account).