Corporate GIC - how to account for tax purposes | Income tax filing | Discussion forum

For corporations, Income Tax Act subsection 12(3) specifies tax year accrual.

That's different from individual taxpayers who have anniversary date accrual specified by subsection 12(4).

Yes, that's what subsection 12(3) seems to say.

A corporation has to report interest accrued in each of its taxation years and doesn't wait until the anniversary dates of the GIC or regular bond.

The exceptions "interest in respect of an income bond, an income debenture, a small business bond, a small business development bond, a net income stabilization account or an indexed debt obligation" make sense.

For example, an income bond or income debenture is "a bond or debenture in respect of which interest or dividends are payable only to the extent that the issuing corporation has made a profit before taking into account the interest or dividend obligation." One may not know how much of the income bond interest will be payable this year until after the year is over and the issuer's profit for the year is calculated.