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Reporting partial bank interest income


PeteH
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Hi,

What is the proper way of reporting a partial interest income earned but not received at year end ?

An example - a 31-day GIC starts December 15 and matures on January 14 (next year). Should I report the partial interest earned (but not received) from December 15 to December 31 (ie. 16 days) or can I report the full interest earned and received to the following year's tax return ?

Thanks,

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Hello PeteH,

The income you report is based on the interest you earned during each complete investment year.

For example, if you made a long-term investment on July 1, 2021, report the interest that accumulated up until the end of June 2022 on your 2022 return even if you do not receive a T5 slip. Report the interest from July 2022 to June 2023 on your 2023 return.

For more information on this topic, please visit the CRA website:  https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12100-interest-other-investment-income/line-12100-bank-accounts-term-deposits-guaranteed-income-certificates-gics-other-similar-investments.html

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CRA states:  

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.

To clarify - report July 1, 2020 to Dec 31, 2020 interested accumulated in 2020 return ? The CRA explanation is a bit confusing since its saying July 1, 2020 to June 30, 2021 report to 2021 return, so does that mean we don't report the interest portion from July 1, 2020 to Dec 31, 2020 in 2020 return ? 

Thanks again,

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Hello PeteH,

In your example, you would not report the interest in 2020 because you probably would not have received any interest until your investment matured in July 2021.

To simplify, report interest when you receive a T5 slip.  Or if the interest received is under $50, you would not receive a T-slip, but you must report it when received. 

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