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GIC monthly interest payout
August 19, 2022
6:30 am
Sandy999
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I can only find Oaken Financial and Motive Financial that have a GIC which will payout a monthly interest to a savings account. Does anyone know of any others that will do this? Oaken drops the rate if you want interest paid monthly. Motive you must be over 57 to get this but they keep the same rate.

August 19, 2022
6:49 am
bhuc
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I know CIBC pays monthly and doesn't reduce interest rate .
2 caveats, term must be > 1 yr and age must be => 60 according to my finrep at cibc.

August 19, 2022
7:26 am
Norman1
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Simplii Financial GIC's pay or compound monthly:

1 Simple annual interest rate. Your interest rate is guaranteed and fixed for the duration of the investment. Interest is calculated daily based on the simple annual interest rate and is paid or compounded monthly (depending on the interest option chosen).

August 19, 2022
11:44 am
RetirEd
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Peoples Trust (and Peoples Bank) set up monthly-pay GICs for me last week. Ally (sadly gone), VanCity, Scotia have done it over the years, and other places, too, though I'd have to root around in records to find where.

Most of my term deposits are monthly-pay because that gets me a bit of extra cash as one goes along, making laddering and cash-flow more flexible and granular. The exceptions are where I expect rates to be dropping and want to freeze in the higher rate.
RetirEd.

August 20, 2022
8:18 am
hwyc
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Good to know Peoples is willing to do monthly interest payout. It is not documented on their site. I want that option & is contemplating their 2 yrs term.

To the topic - Manulife & Tandia also provide monthly interest payout option but at slightly lower rates.

August 21, 2022
11:03 am
RetirEd
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One can think of monthly payout as getting the amount of one year's interest as a 1-year deposit at the rate of a five-year.
RetirEd

October 6, 2022
9:09 am
hwyc
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OTR Peoples do not have the option for GICs to payout monthly. I tried to apply for one to no avail.

October 6, 2022
2:58 pm
mechone
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hwyc said
OTR Peoples do not have the option for GICs to payout monthly. I tried to apply for one to no avail.  

I was just going to phone them are you sure they don't ? How can someone above say they do and did it or did you get a clueless CSR

October 7, 2022
2:26 am
RetirEd
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CORRECTION: In my posts above in this thread, read "Annual payout" instead of "Monthly payout." My bad.

I was planning to explain the advantage of any payout during term as a way to get part of the term deposit out sooner but with the long-term interest rate. I must have been accidentally led astray by the discussion of monthly payout.

I did in fact score two ANNUAL-payout terms in August from Peoples. My earlier experiences with monthly payout were not with them.
RetirEd

October 9, 2022
12:20 pm
Moneyman2
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Serious question. I haven't bought a GIC in years but probably going to pull the trigger after next BofC meeting and purchase 1 or 2 year GIC. My question is, if I purchase, lets say a 2 year, non redeemable GIC. Do they send me a T5 slip for the interest that is earned every year even though I might decide to roll over the interest until the maturity of the 2 years or will I just get the slip at the conclusion of the 2 years? Much appreciated.

Also, how do I start my own topic for discussion easily? Thanks. GL

October 9, 2022
12:23 pm
HermanH
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They will send you a T5 every year, after interest is calculated and added to your GIC. For a 2-yr GIC, you will receive 2x T5 statements.

October 9, 2022
1:17 pm
Norman1
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A T5 should be issued after each anniversary year.

October 9, 2022
2:25 pm
Moneyman2
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Thanks. So even though I can't access the money until the conclusion of the term, I will be taxed on it?

October 9, 2022
9:24 pm
Loonie
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A long time ago, perhaps 25 years or more, the T5s were only issued every 3rd year of the GIC, but that changed. Now it's annual. Some financial planners suggest that for this reason you should ask for annual payout out of which to pay the tax. This could be particularly important for people with limited means, so they don't have to scrape up extra money before they've received any.

October 9, 2022
11:25 pm
Norman1
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That's correct: One is deemed to receive interest on each anniversary date, regardless of the terms of the GIC.

That is done to thwart sophisticated taxpayers from buying something like a 10-year strip bond to defer taxes on the interest for ten years.

October 9, 2022
11:41 pm
Moneyman2
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Much appreciated y'all

October 11, 2022
1:54 am
RetirEd
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Norman1: I confess to not having read up about this, but is all the year's interest from payments during the year deemed income at the anniversary date, or would shorter payout periods (such as monthly or those off boutique ones with 8+8 months) deemed to be paid at time of crediting? I think it wouldn't affect taxes, as the total would only be reported to CRA when the T5 was issued, right? Or am I missing some circumstance where it would make a differerence?
RetirEd

October 11, 2022
5:24 am
savemoresaveoften
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Norman1 said
That's correct: One is deemed to receive interest on each anniversary date, regardless of the terms of the GIC.

That is done to thwart sophisticated taxpayers from buying something like a 10-year strip bond to defer taxes on the interest for ten years.  

On top if I remember correctly, the first T5 will be at least after the 1st anniversary date. For example, a new GIC purchase on Jul 1, 2022 will not be issued a T5 for 2022. Rather the 2023 T5 will include 18 months of interest, whether the interest is reinvested or paid out is irrelevant.

October 11, 2022
9:23 am
FastJonny
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savemoresaveoften said

On top if I remember correctly, the first T5 will be at least after the 1st anniversary date. For example, a new GIC purchase on Jul 1, 2022 will not be issued a T5 for 2022. Rather the 2023 T5 will include 18 months of interest, whether the interest is reinvested or paid out is irrelevant.  

If the GIC is two years plus then it appears CRA rules as per post #14 indicates that the T5 issued will be for the first 12 months in 2023 not 18 months, the last six months of 2022 will be reported the following year.
Relevant portion "For example, if you made a long-term investment on July 1, 2020, report the interest that accumulated up until the end of June 2021 on your 2021 return even if you do not receive a T5 slip. Report the interest from July 2021 to June 2022 on your 2022 return."

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