Personal Finance

no T3 (T5?) for taxable investment account?

  • Last Updated:
  • Mar 22nd, 2018 8:25 pm
[OP]
Sr. Member
Jan 14, 2010
684 posts
219 upvotes
Central Ontario

no T3 (T5?) for taxable investment account?

This is my first experience with a taxable investment account, and I was nervous to purchase anything fancy yet, so stuck a ladder of GICs in there. I haven't received a tax slip for these investments, and according to my broker I won't get one. Can anyone enlighten me (or link to) my responsibilities. Much thanks,
2 replies
Sr. Member
Oct 14, 2012
789 posts
526 upvotes
Woodstock
I'm not a tax professional, or an accountant, I just pay taxes. But this is how I read the guide:

You will report the interest earned, whether or not it was paid out to you, each year for GICs. So if, for e.g. you bought a 5-year GIC, you will report and pay tax on the interest earned each year even though you don't get paid it till the end of the 5-year term.

https://www.canada.ca/en/revenue-agency ... ments.html

The tricky part in your case, is
-when did you buy the GICs and what terms do they have?
-you may not have any interest to report on your 2017 return if you bought after January 1 and all of the terms were at least 365 days.

Most internet examples seem to assume you bought the GICs on January 1 of the year and therefore earned the full annual % that year for your taxes. But what if you bought the GIC in May?

from the General Tax Guide info for line 121
"The income you report is based on the interest you earned during each complete investment year.
For example, if you made a long-term investment on July 1, 2016,
report on your return for 2017 the interest that accumulated to the end of June 2017,
even if you do not receive a T5 slip.
Report the interest from July 2017 to June 2018 on your 2018 return.'

https://www.canada.ca/en/revenue-agency ... P508_52977

So it reads that you probably do not report any interest earned during the first few months of a GIC on that same year's tax return.
I mean, if you read it, what it seems to say
buy GIC in July 2016, nothing reported on return for 2016
on return for 2017 report 1 year's interest for July 2016-June 30 2017
on return for 2018 report 1 year's interest for July 2017-June 30 2018
etc

If you bought any GICs on January 1, 2017 though, they would have earned one year's interest by December 31, so that interest would have to be declared on the 2017 return; and if you bought any term deposits with terms of less than 1 year that matured during 2017, you'd have to declared the interest on those, too.

I hope this helps a bit. I'd contact a bank if you have a good relationship with them to double check. They sell GICs straight to people without having them inside a brokerage account so they know how the interest has to be reported to the CRA. Ask them if you bought one now, in March 2018, how would you report it on your 2018 tax return.
[OP]
Sr. Member
Jan 14, 2010
684 posts
219 upvotes
Central Ontario
Thanks so much for comprehensive reply. Will google some more, but was very confused this morning after speaking with discount broker rep. I believe you are correct, and agree that the problem is determining the partial year interest (i'm in the precise situation you describe). Now I'm wishing I'd just sucked it up and learned how to calculate ACB...

Top