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Email this7:47 am
February 18, 2020
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A family member had a Gic that started April 2018 and matured 18 months later in 2019. I'll use made up numbers for simplicity. The principal was 100k and interest at maturity was 6k. He received a t5 for 2018 of 2k. He just received a t5 for 2019 of 6k.
The two t5's add up to 8k even though interest paid was 6k as per GIC contract. He received 106k in his account last fall upon maturity. The bank told him that was correct..im confused as to how it can be .. any ideas..
8:44 am
May 22, 2015
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something doesn't add up here unless the numbers you made up are wrong ! First, from Apr->Dec 2018 that's 9 months (half of the term), so the amount of the interest in T5 should be close for 2018 and 2019, not a difference of 4K !!!!.
8:49 am
April 26, 2019
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For an 18 month you agree that you should have had 2 T slips? Assuming the interest was paid at maturity do you have a document from the FI showing the principal and interest paid? Take copies of that and the 2 T slips to the FI and ask for a corrected T slip. By any chance was there any other interest made at this FI in the 2 years when the 18 month GIC was on deposit? In hindsight, first ask the FI where the interest came from for each T slip.
8:49 am
February 18, 2020
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Yes.. I made up the numbers because I don't have them with me..my point is that t5's add up to more than the interest paid.. the 2019 t5 shows the total amount for interest that was paid..but the 2018 t5 adds another amount that makes the 2 t5's add up to more than the interest paid.. shouldn't t5's equal the amount of interest paid?
8:50 am
January 12, 2019
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jimy said
. . . The bank told him that was correct . . .
And the bank didn't explain 'Why' it was correct❓
I think we're missing part of the story. 
" Live Long, Healthy ... And Prosper! "
8:53 am
February 18, 2020
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GICinvestor said
For an 18 month you agree that you should have had 2 T slips? Assuming the interest was paid at maturity do you have a document from the FI showing the principal and interest paid? Take copies of that and the 2 T slips to the FI and ask for a corrected T slip. By any chance was there any other interest made at this FI in the 2 years when the 18 month GIC was on deposit? In hindsight, first ask the FI where the interest came from for each T slip.
I did see a bank deposit for the original principal and total interest. I have an appt. With FI and have documents you mentioned..and said FI has already told me t5's are correct. I think she is wrong..of course
8:54 am
February 18, 2020
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Dean said
jimy said
. . . The bank told him that was correct . . .
And the bank didn't explain 'Why' it was correct❓
I think we're missing part of the story.
I'll know tomorrow after appt...see my other response
8:57 am
April 26, 2019
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jimy said
Yes.. I made up the numbers because I don't have them with me..my point is that t5's add up to more than the interest paid.. the 2019 t5 shows the total amount for interest that was paid..but the 2018 t5 adds another amount that makes the 2 t5's add up to more than the interest paid.. shouldn't t5's equal the amount of interest paid?
More than the interest paid for that one 18 month GIC? But was there any “other” money collecting interest at that FI in those 2 years? A T slip is not per GIC. Once again ask the FI to explain the income for each T slip.
What FI?
Once again stay focused and expect a detailed answer for “where did the income come from, for each slip?” Don’t expect the he or she to be knowledgeable.
9:01 am
February 18, 2020
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GICinvestor said
More than the interest paid for that one 18 month GIC? But was there any “other” money collecting interest at that FI in those 2 years? A T slip is not per GIC. Once again ask the FI to explain the income for each T slip.
That's what I thought too..but when I did the calculations the t5 amount for 2018 is correct for the portion of 2018..and the t5 Amount for 2019 is correct for the entire term.
We shall see tomorrow..
9:06 am
April 26, 2019
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I see what you are saying. Keep in mind the 2019 slip will be based on the compounded 2018 interest as well. I hope I said that right.
9:44 am
October 29, 2017
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These things are calculated by computers, aren’t they? There must be other deposits or bonus amounts. It isn’t done by a person, it’s a set algorithm. The only mistake would be the interest rate used. I would simply ask to see where my t slips income was deposited. If they can’t show you the income, then there is a problem.
4:15 pm
January 12, 2019
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jimy said
I'll know tomorrow after appt...see my other response
It will be interesting to read what you find out.
" Live Long, Healthy ... And Prosper! "
5:44 pm
April 6, 2013
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My guess is that the 2019 T5 slip is correct. But, the 2018 T5 slip should not have been issued.
Unless the accrued interest was compounded or paid out in 2018, no 2018 T5 slip should have been issued. Earliest T5 slip should have been for accrued interest to the first anniversary of the GIC.
The 18-month GIC was purchased April 2018. The first anniversary is April 2019. So, at least one T5 slip would be required for 2019. A T5 slip for accrued interest to April 2019, even if not compounded or paid out.
But, the GIC matured the same year in October 2019. There could be one 2019 T5 slip for interest to the anniversary April 2019 and another 2019 T5 slip for the remaining interest to October 2019. Alternatively, there could be just one combined 2019 T5 slip for all the interest.
Furthermore, T5 slips are never cumulative. Chapter 8 of the T5 Guide – Return of Investment Income says
On the T5 slip, enter the total of all interest accrued to each anniversary day. Do not include any interest you previously reported.
5:57 pm
April 26, 2019
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Is not interest on a GIC taxable every year wether or not it paid out any interest?
Being a dinosaur I believe way way back you did not pay income tax until the interest was paid out at maturity ie. end of 5 years. But it was changed to annual to help the coffers of the federal government.
Any Pterodactyls remember that?
6:01 pm
October 29, 2017
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Norman1, would you then have to refile your 2018 taxes without the 2018 T5?
6:12 pm
April 6, 2013
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Vatox said
Norman1, would you then have to refile your 2018 taxes without the 2018 T5?
I don't think CRA would accept that. The issuer of the 2018 T5 slip would have to first file an amended 2018 T5 slip.
6:16 pm
April 6, 2013
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GICinvestor said
Is not interest on a GIC taxable every year wether or not it paid out any interest?Being a dinosaur I believe way way back you did not pay income tax until the interest was paid out at maturity ie. end of 5 years. But it was changed to annual to help the coffers of the federal government.
Any Pterodactyls remember that?
I think it was changed to every three years. It was changed again to annually.
Perhaps too many sly and wealthy taxpayers were buying 20-year strip bonds!
6:25 pm
April 26, 2019
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From CRA......see last sentence.
Term deposits, guaranteed investment certificates (GICs), and other similar investments
On these investments, interest builds up over a period of time, usually longer than one year. Generally, you do not receive the interest until the investment matures or you cash it in.
For example, interest on a compound GIC is earned on a monthly basis and is automatically reinvested, earning compound interest until the bond is cashed or matures. Interest on a compound GIC is paid when the investment is cashed, not annually.
Report the interest you earned during each complete investment year.
For example, if you made a long-term investment on July 1, 2018, report on your return for 2019 the interest that accumulated to the end of June 2019, even if you do not receive a T5 slip. Report the interest from July 2019 to June 2020 on your 2020 return.
Note
If your investment agreement specified a different interest rate each year, report the amount on your T5 slips, even if it is different from what the agreement specifies or what you received. The issuer of your investment can tell you how this amount was calculated.
For most investments you made in 1990 or later, you have to report the interest each year, as you earn it.
9:11 pm
April 6, 2013
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GICinvestor said
From CRA......see last sentence.…
Report the interest you earned during each complete investment year.For example, if you made a long-term investment on July 1, 2018, report on your return for 2019 the interest that accumulated to the end of June 2019, even if you do not receive a T5 slip. Report the interest from July 2019 to June 2020 on your 2020 return.
…
For most investments you made in 1990 or later, you have to report the interest each year, as you earn it.
Unfortunately, the wording of that last sentence is sloppy. The preceding text indicates that it is usually each complete anniversary year and not each calendar year.
That interpretation is more consistent with what we found earlier in section 12 of the Income Tax Act.
5:17 am
March 30, 2017
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So is it indeed true the FI issued an extra T5 that it shoudln't ?
If so is it that FI only or its a common issue ?
I do have longer term GIC and have been just reported based on T5 received each year... And Rev Canada calc tax based on same T5s too !!
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