The investor will have to pay taxes on any capital gains / dividends / interest she receives.
In Ontario All capital gains and Canadian dividends are taxed at lower rates than other income.
Interest income and dividend income are received or accrued each year, and are taxable in the year you receive or accrue the income. You have no control over which year the income is paid. You are not taxed on capital gains until your investment is sold, so you have some control over which year you receive the income, because you can choose when to sell your investments.
The tax paid on capital gains is low, because only 50% of capital gains is taxed, and the gains are not taxed until the investments are sold, except in situations where there is a deemed disposition
It also depends on what you qualify as an investment, for instance, investing in real estate or antiques can be tax free but a business investment might be taxed.
You can't really answer this question in a general way without at least specifying locality and the specific kind of investment.
So the 'how it works elsewhere' portion of your question is not easy to answer without a long list of examples and localities.