Non-registered GIC question

mshav1 · Post by **mshav1** » Mon Feb 16, 2009 5:01 pm

I am a Canadian citizen and living in the US since Jan 2008. This is my first year to file US taxes. I have a couple of questions:

â€¢ I wanted to verify if I should enter the value of my non-registered GIC in 8891
â€¢ My Canadian bank has indicated that even though the GIC I have is non-registered, when I withdraw the funds at maturity that it will be subject to taxes. Is this true?

I appreciate any response. Thanks.

nelsona · Post by **nelsona** » Tue Feb 17, 2009 6:51 am

8891 is for RRSP only.

The bank is acting like it is an RRSP. Better clear that up.

andied · Post by **andied** » Tue Feb 17, 2009 5:49 pm

The GIC interest earned will be subject to tax, but the principle should not be taxable.

nelsona · Post by **nelsona** » Tue Feb 17, 2009 5:50 pm

[quote="andied"]The GIC interest earned will be subject to tax, but the principle should not be taxable.[/quote]

Of course, but this is not what the bank is telling our poster.

andied · Post by **andied** » Tue Feb 17, 2009 5:53 pm

My previous comment was assuming it is in fact a non-registered GIC.

nelsona · Post by **nelsona** » Tue Feb 17, 2009 5:58 pm

That is what we are trying to determine. A bank saying that a witdrawl is subject to tax leads me to think the bank is saying they are registered, as 'withdrawing' the funds from a GIC has no bearing on taxation: interest has already been taxable each year or at maturity, whether its rolled into another GIC or not.

mshav1 · Post by **mshav1** » Tue Feb 17, 2009 10:41 pm

Thank you for the replies.
The account is a non-registered GIC. I received a T5, I called BNS to inquire if I have the right tax slip for non-residents. The CSR that I was speaking to said that I should include it in my 8891 because it is subject to withholding when taken out.

I called my actual branch this am and they confirmed that the CSR was giving the wrong info.

I guess my next questionâ€¦.can I declare the T5 income in my US tax return vs filing a Canadian tax return? I received no other income in Canada.

nelsona · Post by **nelsona** » Wed Feb 18, 2009 4:52 am

Yeah, the telephlunkie you first spoke to was a moron.

Your T5 does not have any tax withheld does it? It shouldn't. there is no reason to file a Cdn tax return. Cdn interest is not reportable on a non-res return, and no NR tax is withheld since jan 01, 2008.

The interest on your GIC is subject to US tax, so simply include the income, in the year of maturity (the US allows interest to be reported on a cash basis, rather than the accrual method which must be used in canada.)

There is np such thing as a 'withdrawal' of a GIC. The GIC matures. Then you can do what you want with the proceeds.