Claiming interest on Market-linked GICs

[dgjohnston101]

I invested in a 5-year Market-Linked GIC (I think they're also called Index-linked or Market-Returns).

I received a T5 slip from the bank for the interest that was earned over the 5 years of the investment.

How do I claim only the part of the interest that was earned the last tax year (2022)?

[there-hey]

As per the Canada Revenue Agency (CRA), the income you report is based on the interest you earned during each complete investment year. To claim only the portion of the interest that was earned during the last tax year (2022), you will need to review the T5 slip that you received from the bank. The T5 slip should indicate the amount of interest that was earned each year during the term of the investment. If you cannot find it, please consult with your bank.

Once you have determined the portion of the interest report investment income you earn from your GIC on Line 12100 – Bank accounts, term deposits, guaranteed investment certificates (GICs), and other simi... of your Tax Information and Benefit Return .

For more information, please refer to TurboTax FAQs page: Reporting Income from Guaranteed Investment Certificates

Thank you for choosing TurboTax.

[dgjohnston101]

Thanks for the reply to my question.

The T5 slip only shows the entire amount of the interest that was earned for the entire 5-year period of the investment. I talked to my advisor from the bank; he said that a market-lined GIC was different then other types of GICs ("it's not really a GIC") and that the interest is only determined once at the end of the GIC's period based on the results of the "market" that it was linked to. So the performance at the end of the period is compared to the start of the period and that's your earnings.

Apparently all the available information about normal GICs isn't helpful for market-linked GICs.

Has anyone else in the community had personal experience with this and been able to find out a way to spread the earnings out over the time period of a market-linked GIC. I know it would have to involve updating the last 5 years and the government likely isn't interested in the extra work involved.

As a side note my advisor said that the bank no longer offers these GICs so maybe they weren't well received because of this problem with the earnings!

[TurboTaxSusan · Accepted solution]

According to this HSBC page: https://www.hsbc.ca/investments/market-linked-gic-investments/ (non-registered) Market-Linked GICs are taxed the same as regular GICs. You report the interest yearly. 

You may want to ask the Canada Revenue Agency (CRA)  what you should do in this case. 

If you are in Canada or the United States, you can call the CRA at 1-800-959-8281. If you are elsewhere, you can call 613-940-8495. This page has more ways to contact the CRA: Contact the Canada Revenue Agency

[dgjohnston101]

Thanks so much for the reply on this. I tried searching on Market-Linked but didn't come up with this type of detail.

Unfortunately the key information at this site as it applies to my case are the words "minimum guaranteed interest" and "minimum interest rate". In my case there was no minimum interest rate on the ML-GIC and the payout was only based on the performance at the end of the five year period; therefore only one T5 slip at the end.