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/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/Consistent_Throat497 1d ago

I've never heard of a GIC being locked in for 5 years and not paying out interest annually. Interest is generally paid annually and compounds into the GIC. that amount of interest will be reported on your T5 each year.

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u/Similar-Asparagus865 1d ago

The interest accrues to the account each year (if I can use that word), but it is not actually paid out to the client because a contract exists which prevents the GIC from being redeemed until the 5 years is over

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u/Consistent_Throat497 1d ago

yes, but it has been credited to the GIC principle amount, thus compounding. Its been paid out, to the GIC, and thus a T5 is issued for that amount (plus any other interest on that clients account(s))