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Email this6:00 pm
September 19, 2018
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Norman1 said
That is strange. I just checked Scotia iTRADE again. The US$ GIC rates are still under the US$Pay tab, as AltaRed described.A web browser issue or browser caching issue? I used Microsoft Edge.
Thanks AltaRed and Norman 1. I have just figured it out. I previously purchased the GIC;s through the "quotes and Research" tab not the "trade" tab. They previously showed the rates under the Us$ pay tab there as well and as the instructions still indicate there I was able to purchase them in that way. They must have discontinued that way of purchasing them. That is also the area that advised they would not be covered under CDIC.
I think that I may have obtained older rates as well.
Perhaps a call to them and request the higher rates would be in order. HMMM.
Anyway, thanks again.
6:49 pm
October 27, 2013
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FWIW, BMO Investorline has similar rates (varying just a bit)....obviously BMO GICs (not Scotia GICs).
Added: A thought I don't know the answer too (and a bit off-topic) because I've never bought USD GICs. Would the principal values (in non-registered accounts) also trigger cap gains/losses based on the difference in forex rates at time of purchase vs time of maturity? That is not the case in HISA/ISA USD accounts because they are considered deposit accounts rather than investment assets, but USD money market funds and USD cash ETFs (like USD bonds) do attract cap gains/losses which must be reported on the T1 Schedule 3 in the year of maturity.
6:08 am
September 11, 2013
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CRA, typically, is unclear on whether or not a GIC is capital property, it all depends, they say in this letter:
https://taxinterpretations.com/cra/severed-letters/2012-0469691e5
Some years ago I helped a person do her taxes who had sold 3rd party GICs in a brokerage account (broker probably bought for resale) because she unexpectedly needed the money and the resultant discount she suffered we claimed as a capital loss (with an explanatory letter), it all went through fine.
8:22 am
October 27, 2013
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Thank you for that interpretation. I would argue the situation you described is a capital loss situation because the GICs were sold prior to maturity on the secondary market and suffered a loss.
Based on that, however, I would argue that term deposits are normally income, i.e. cash or near cash equivalent, assets and thus do not trigger a cap gains/loss event due to forex differences between acquisition and disposition. That would be good news for the taxpayer/investor over the long term because it does not require one to have Schedule 3 entries every time a USD GIC is bought and than again when matured.....like a USD money market mutual fund would.
8:34 am
September 11, 2013
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I don't know.........
8:44 am
October 27, 2013
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Page 4 of the RBC document.....
Negotiable instruments
Notes, bonds, mortgages,
debentures, government treasury
bills and notes, commercial paper
and GICs that are traded on the
secondary market are considered
negotiable instruments. When
these securities are denominated
in a foreign currency, there is a
foreign exchange gain or loss on
the disposition due to currency
fluctuations, even if the proceeds are
maintained in the same currency or
rolled over into similar securities.
The key words are 'traded on the secondary market' so in the case you cite, I agree those GICs were traded (sold) on the secondary market. In the situation I mention, the GICs simply mature and the only value difference on a CAD equivalent basis is the forex difference. I'd still argue there is no cap gain/loss on a USD GIC that simply matures.
8:54 am
September 11, 2013
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Makes sense, though I did find this on greedyrates.ca when I googled: "When your foreign currency GIC matures, you may be required to report a gain on the foreign currency if you converted it back to Canadian dollars, so this is something important to be aware of before buying a foreign currency GIC."
9:42 am
October 27, 2013
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Sure though greedyrates.ca isn't the last word on facts and the site uses the qualifier "may". However, in the absence of anything more reliable, I think buyers of USD GICs need to exercise their own judgement about reporting forex gains/losses. It may not be a big deal given CRA has more important fish to fry.
A note to Peter: The posts on this discussion I started on forex cap gain/loss on USD GICs may merit its own thread. It could be an important matter especially for those making substantial investments in USD GICs.
10:41 am
September 11, 2013
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This link says the same, supports my inclination that there is a capital gain or loss if it's converted back to Canadian dollars, which if you've used a $US account and the matured funds remain in it would not be the case anyway. But I agree that this is way too obscure an issue for CRA to ever even realize exists.
https://www.ratehub.ca/blog/the-pros-and-cons-of-foreign-currency-gics/
11:08 am
October 27, 2013
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I don't know anyone who would incur forex commissions to physically convert between currencies. Unless one does an NG, or has an IB account, the 1.5% or greater bank style commissions defeat the purpose. For me, a USD GIC would be a place to set existing USD aside for > 1 year than have it in a brokerage USD ISA.
FWIW, brokerage USD ISAs are not subject to cap gains/loss triggers since they are deposit accounts.
5:33 pm
April 6, 2013
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According to the RBC document and CRA IT-95R, it depends on whether the GIC is negotiable or not.
This is from CRA IT-95R:
Foreign currency funds on deposit are not considered to be disposed of until they are converted into another currency or are used to purchase a negotiable instrument or some other asset, i.e. foreign funds on deposit may be moved from one form of deposit to another as long as such funds can continue to be viewed as "on deposit". Term deposits, guaranteed investment certificates and other similar deposits which are in fact not negotiable, are considered funds on deposit. Transactions in which foreign currency funds are invested in negotiable instruments such as notes, bonds mortgages, debentures, U.S. government treasury bills and notes and U.S. commercial paper, will require a foreign exchange gain or loss calculation at the time the foreign currency funds are used to purchase these investments and as well, each time such investments mature or are otherwise disposed of, whether or not the funds are rolled over into like securities.
Most GIC's are not transferable and therefore not negotiable. But, some are.
9:21 pm
November 25, 2019
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I want to invest in USD GICs and am wondering which banks are currently offering the best rates. I see that Tangerine is offering 4.75% for a 3-year GIC and State Bank of India (Canada) is offering 4.50% for a 15-month GIC.
Anyone knows of better offers for USD GICs?
6:47 am
September 11, 2013
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I suppose it's arguable whether an instrument that indicates no transferability yet for which there exists a secondary market, i.e. transferability happens, is "negotiable".
11:52 pm
April 6, 2013
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There can't be a secondary market for non-transferable, non-assignable GIC's.
If I had a $20,000 Tangerine GIC, no-one is going to give me money for it, leave me as the owner of the GIC in the records of Tangerine Bank, and rely on a side agreement for the future interest payments and the $20,000 principal at maturity.
It is a question of fact whether a specific GIC is negotiable or not. That's what the phrase"deposits which are in fact not negotiable" in the CRA interpretation bulletin refers to.
7:06 am
September 11, 2013
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Norman1, I understand. And now that I rethink about the scenario in my post #43 I recall it actually involved the person's deceased parent's GICs (I was helping her be executor, do final returns, etc), i.e. the person (executor) needed to liquidate some of her deceased parent's GICs to pay estate bills (all GICs were all 1-year term for which executor was just going to wait the remaining months until maturity, if I recall) and was able to do so in the parent's (now estate's) brokerage account, though "sold" (redeemed?) with a "penalty" and that's what was claimed as a capital loss against other capital gains. I understand that GICs are generally redeemable on death but for whatever reason there was a cost that resulted in receiving net cash that was less than the principal amount of the liquidated GICs plus accrued interest so I figured we'd claim it as a capital loss on the tax return, CRA accepted. That's my recollection today.
I notice my RBC Direct Investing account that has a GIC in it shows a "sell" button beside it but when I just tried it it says there's no buy order available right now for this instrument and to call them.
1:15 pm
April 6, 2013
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Transferability and assignability depends on the fine print of the GIC.
It is possible that the GIC's sold through brokerages are transferable. Then, the GIC could be purchased by the broker's bond desk or another investor. That "penalty" could be the embedded commission plus a yield-to-maturity adjustment, like that for pre-owned marketable bonds.
For RBC Royal Bank, it depends on the particular GIC, according to their GIC agreement:
Transfer
Some GICs can be transferred to a new owner, others cannot be. If you ask us [Royal Bank of Canada, Royal Bank Mortgage Corporation, Royal Trust Corporation of Canada, or, in Quebec, The Royal Trust Company] , we will tell you whether your GIC can be transferred and what you must do to transfer it to someone else. You cannot give your GIC as security to anyone except us.
Once a GIC has been transferred by you, we will treat the new owner as if they were you, for all purposes of this Agreement.
2:03 pm
September 11, 2013
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That was exactly my impression at the time, that the broker (CIBC's Investor's Edge in that case, I believe) was "making a market" for these GICs (generic GICs from banks like EQ and other banks in the broker's roster of GIC offerings), the same as for bonds, and that the price was determined largely by yield-to-market plus a healthy commission for the broker for providing the service.
5:03 pm
April 6, 2013
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Brokers like Investor's Edge can do that because such brokers place the GIC's in its own or in a nominee's name. The broker or nominee holds the GIC's in trust for the clients and keeps the record of the beneficial ownership.
The broker or nominee can transfer the beneficial ownership in its own records, regardless of whether the GIC issuer allows transfers or not.
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