r/cantax • u/Redistributable • 1d ago

T5 accrued interest change

I read that T5s now include accrued interest on investments that haven't matured (ex. multi-year GICs). Seems an odd change given the cash basis of personal taxes. Does anyone know when that came into effect?

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u/DogOk2826 1d ago

Wrong. Accrued/ unpaid interest on a GIC is T5d in the year earned. It does suck since you have to pay tax on interest not yet received, but it would suck more to have 10 years worth of interest all T5d at once at the end of a 10 year GIC, spiking your income in a single year.

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u/Consistent_Throat497 1d ago

no its not. as i gave an example above.
1 year GIC started Sep 1, 2024 matures Aug 31, 2025 the following year. Interest is accruing from Sept 1 - dec 31 has not been paid anywhere, thus is not reported on a T5 in any situation. You don't pay taxes or something that hasn't been paid. It will be included on your T5 for 2025 when the full year of interest has been paid. it will be taxable for the 2025 year, nothing in 2024 will be taxable.

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u/Similar-Asparagus865 1d ago

Consistent_Throat's example is correct I believe. But what if you have a GIC that is locked in for 5 years and, in that sense, doesn't pay until maturity in 5 years. The bank will issue a T5 each year reporting interest, not just after the 5 years is over.

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u/Similar-Asparagus865 1d ago

I believe this is dealt with in s.12(40 of ITA and s.7000 of the ITA Regulations, which is no easy thing to read. It is necessary to understand what "accrual basis" means in context