Sorry if this was covered elsewhere but I could not find anything right on point.
I opened two GICs in 2017. One just matured a few days ago after one year and I rolled it over into a new GIC. The other GIC is for a term of 18 months and matures in September 2018. I tried reading the tax rules but got more confused.
What amount of interest income do I report for both GICs on my tax return for 2017? It appears I have to figure out what was earned (but not paid) up through 12/31/2017 and report the amount on my Canadian return. I assume I would report the same amount on my US 1040. I did not recieve any tax form for the interest on the GICs from the bank. If they issue a form for 2018, won't there be a matching problem? Confusing. Thanks for any help.
Reporting Interest earned on GIC
Moderator: Mark T Serbinski CA CPA
Unlike IRS, CRA requires you report accrued interest every year, tax receipt or not. Thus it would make sense to choose this yearly method for US as well, tax receipt or not.
In reality, whether you choose to report it annually in US or wait till maturity, you won't be paying any tax on it.
In general you are always supposed to report income whether you get a tax slip or not.
In reality, whether you choose to report it annually in US or wait till maturity, you won't be paying any tax on it.
In general you are always supposed to report income whether you get a tax slip or not.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
CRA states that "The income you report is based on the interest you earned
during each complete investment year." You did not receive a tax slip in 2017, because the one year anniversary for both GIC's did not fall in 2017, but in 2018. I believe you do not have to report interest from either of these GICs on your 2017 return. You will receive tax slips for the full amount of interest for both GICs in 2018 and it can all be reported on your 2018 return.
during each complete investment year." You did not receive a tax slip in 2017, because the one year anniversary for both GIC's did not fall in 2017, but in 2018. I believe you do not have to report interest from either of these GICs on your 2017 return. You will receive tax slips for the full amount of interest for both GICs in 2018 and it can all be reported on your 2018 return.
Thanks for that clarification on the term "annual" in this case. But just so we are clear, whether or not a slip is issued, income must be reported on an ANNUAL basis, whether or not the GIC matures in that year. As Penn pointed out the one year mark fell in 2018, so you do not have to worry about this for 2017 return, either in US or Canada.
However, once you take GICs that mature over a period LONGER than one year, you must still (in Canada) report the income as received on those anniversary dates, slip or not. Had you, for example, taken 24-month GIC last year, you would have incoem to report in 2018 and 2019 for that GIC. The issuer would issue a yearly T5 slip, if the interest is more than $50.
The cross-border implication, which I was more focused on, was that while for US purposes you do not have to report the income until final maturity, it is usually best to report at the same time in both countries, for foreign tax credit reasons.
However, once you take GICs that mature over a period LONGER than one year, you must still (in Canada) report the income as received on those anniversary dates, slip or not. Had you, for example, taken 24-month GIC last year, you would have incoem to report in 2018 and 2019 for that GIC. The issuer would issue a yearly T5 slip, if the interest is more than $50.
The cross-border implication, which I was more focused on, was that while for US purposes you do not have to report the income until final maturity, it is usually best to report at the same time in both countries, for foreign tax credit reasons.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
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Canadian Newbie
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I guess expenn's explanation, and my repeat wasn't clear?
No. since the anniversary would only be Feb 1, 2018 amd the maturity is Aug 2018, all income will be reported in 2018, in both countries.
No. since the anniversary would only be Feb 1, 2018 amd the maturity is Aug 2018, all income will be reported in 2018, in both countries.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
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Canadian Newbie
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- Joined: Thu Mar 12, 2015 11:59 am
Sorry for the confusion. I was confused over the term annual and anniversary date. It makes sense to me know that even though the GIC term was 18 months, since it matures in 2018, the income is reported in 2018. If the GIC for 18 months matured in 2019, I can see how that is different.
If I had taken the 18 month GIC out on November 1, 2017 and it matured on May 1, 2019, it looks like I would report the interest for the period of Nov. 1, 2017 to Nov. 1, 2018 on my 2018 return. The balance would be reported on my 2019 return.
I think I am just getting confused over the term annual.
Thanks for the help!
If I had taken the 18 month GIC out on November 1, 2017 and it matured on May 1, 2019, it looks like I would report the interest for the period of Nov. 1, 2017 to Nov. 1, 2018 on my 2018 return. The balance would be reported on my 2019 return.
I think I am just getting confused over the term annual.
Thanks for the help!