GIC and Tax Return | GIC discussions | Discussion forum

That depends on the GIC.

If the GIC is not transferable, then it is reported like a savings account or Canada Savings Bond would be.

If the GIC is transferable, then it is reported like a marketable Government of Canada bond or treasury bill is. Holding a bond to maturity does not mean there is no capital gains or capital losses.

I've held many bonds to maturity the past few years that were purchased at below face value. There is a capital gain at maturity when the bond is redeemed at face value.

There is a complication with foreign currency GIC's and term deposits.

There's no foreign exchange capital gains/losses rolling over non-transferable US$ GIC's. That's like moving US$ between one's US$ savings accounts.

There is foreign exchange capital gains/losses rolling over transferable US$ GIC like there is rolling over 90-day marketable US$ treasury bills.

Fritz23 said
Thank you. Do I have to include GICs in my income tax return (T1) under Schedule 3 (Capital Gain and losses on dispostion)?  

Not if these are CAD GICs and they were sold at maturity at the same principal (invested capital) value as they were bought at.

Norman1, aside from when someone dies I didn't know GICs can be transferable, can you give an example of what GICs are transferable (and thus might generate a capital gain/loss like a bond would)? Thanks.

Bill said
Norman1, aside from when someone dies I didn't know GICs can be transferable, can you give an example of what GICs are transferable (and thus might generate a capital gain/loss like a bond would)? Thanks.

The Peoples Trust non-registered GIC's and term deposits are:

Features:

• A rate that is fixed and guaranteed for the full term of your investment
• Short-term investments available from 30 days to 364 days (interest paid at maturity)
• Long-term investments available from 1 to 5 years (annual or compounding interest options)
• Fully assignable and transferable

…

In their GIC agreement, Royal Bank indicates that some of their GIC's are transferable but not assignable:

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 and, 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.

GIC's bought through an investment dealer/brokerage can be transferable. They are held in nominee form by the dealer. So, such GIC's could, in theory, be transferred between the brokerage's clients by just updating the dealer's beneficial ownership records.

Stockbrokers in the past used this to offer preowned GIC's to help out clients who needed money in a GIC before maturity. Less than five years ago, I helped out with an estate. One of the options given to executor for the deceased's GIC's in the brokerage account was to try to sell them early if executor didn't wish to hold them to maturity.

Fritz23 said
And how about USD GICs if I bought them from USD from my USD Savings account and at maturity transferred the USD back in my USD savings? Not FX-exchange at all.

AltaRed said

I believe this would be a transfer between deposit accounts (no buy/sell), just like one could move USD from a USD savings account to a USD brokerage ISA and back. …

That not the case if the GIC's are transferable. If transferable, then it would be like buying a US$ bond with funds in a US$ savings account and then disposing of the bond on maturity and moving the funds back to the savings account.

One can check Box 15 of the T5008 slip. That box would indicate the kind of security BMO InvestorLine declared the GIC to be. Definitely need to be reported on Schedule 3 if Box15 is one of these:

BON – Bonds
BO1 – A bulk transaction in bonds for which the quantity cannot be determined
DOB – Debt obligations in bearer form
DO1 – A bulk transaction in debt obligations in bearer form for which the quantity cannot be determined
ELN – Equity linked notes

A transferable GIC doesn't need to be transferred to another owner for there to be a reportable dispostion.

If it's transferable, according to its terms and conditions, and it's redeemed at maturity, then there is a dispostion at maturity. Just like at maturity of other negotiable securities like treasury bills, bankers acceptances, and tradeable bonds.

Funds are not considered to be "on deposit" when the funds are placed in a negotiable security like a transferable GIC.

I suspect the US$ GIC, purchased through the dealer BMO InvestorLine, is transferable. Consequently, it is a negotiable instrument and needs to be reported on a T5008 slip when it is redeemed at maturity by the issuer. Not only is there is a foreign exchange that needs to be reported at maturity but also when the GIC was purchased.