Interest and other investment income form part of your total income andmust bereported on your return.
Interest, foreign interest and dividend income, foreign income, foreign non-business income and certain other income are all amounts that you report on your return as interest and other investment income. They are usually shown on aT5 slip,T3 slipandT5013 slip.
You may not receive a T5 slip if the investment income is less than $50, but you must still report the income.
You also have to report the interest on any tax refund that you received in 2023as shown on your notice of assessment or reassessment.
Notes
Special rules apply for income from property (including money) that one family member lends or transfers to another. For more information, see Other amounts you have to report on your return.
Generally, when you invest your money in your child's name, you have to report the income from those investments. However, if you deposited Canada child benefit payments into a bank account or trust in your child's name, the interest earned on those payments must be included in your child's income.
For children born in 2006 or later who report certain investment income, see line 40424.
Foreign income
If you received foreign interest or dividend income, report it in Canadian dollars.
Use the Bank of Canada exchange rate in effect on the day that you received the income. If you received the income at different times during the year, use the average annual rate. The average monthly rate and the daily rate are available by visiting the Bank of Canada.
If you paid foreign taxes on your interest or dividend income, you may be able to claim a foreign tax credit when you calculate your federal (see line40500) and provincial or territorial taxes (Form428). Do not subtract the taxes from your income when you report it.
If you own an interest in a foreign investment entity or an interest in a foreign insurance policy, you may have to report investment income.
If, as a shareholder in a foreign corporation, you received certain shares in another foreign corporation, you may not have to report any amount as income for receiving those shares.
For more information, contact theCRA.
Note
Foreign dividends do not qualify for the dividend tax credit.
Bank accounts
Report interest paid or credited to you in 2023 even if you did not receive an information slip. You may not receive a T5 slip for amounts under$50.
Generally, you report your share of interest from a joint bank account based on how much you contributed to it.
Term deposits, guaranteed investment certificates and other similar investments
Interest builds up over a period of time, usually longer than one year, on these types of investments.Generally, you do not receive the interest until the investment matures or you cash it in.
For example, interest on a compound guaranteed investment certificate (GIC)is earned on a monthly basis and is automatically reinvested, earning compound interest until the bond is cashed or matures. Interest on a compound GIC is paid when the investment is cashed, and not annually.
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, 2022, report the interest that accumulated up until the end of June 2023on your 2023 return even if you do not receive a T5 slip. Report the interest from July 2023to June 2024on your 2024 return.
Note
If your investment agreement specifies a different interest rate each year, report the amount from your T5 slipseven if it is different from what the agreement specifies or what you received. The issuer of your investment can tell you how this amount was calculated.
For most investments you made in 1990 or later, you have to report the interest each yearas you earn it.
For information about reporting methods for investments made before1990, seearchivedInterpretation Bulletin IT-396R, Interest Income.
Treasury bills
If you disposed of atreasury bill when itmatured in 2023, you have toreport the difference between the price you paid and the proceeds of disposition shown on your T5008 slip or account statement as interest.
If you disposed of a treasury bill before it matured in 2023, you may also have to report a capital gain (or loss). For more information, see Guide T4037, Capital Gains.
Earnings on life insurance policies
Report the earnings that have accumulated on certain life insurance policies, the same way you do for other investments, from theT5 slipthat your insurance company sends you.
For policies bought before 1990, you can choose to report accumulated earnings every year by telling your insurer in writing.
Canada savings bonds (CSBs)
Interest on a regular interest(R) bond is paid annually until the bond matures or you cash it in.
Interest on a compound interest(C) bond is not paid until you cash it in.
For both kinds of bonds, report the amount shown on yourT5 slips.
Note
You may not receive a T5 slip for amounts under $50 but you must still report this income.
Completing your tax return
Complete the chart for line 12100using yourFederal Worksheet and enter the result on line 12100 of your return.
Generally, you report your share of interest from a joint investment based on how much you contributed to it.
Forms and publications
- Income Tax Package
- Federal Worksheet
- FormT1135, Foreign Income Verification Statement
- FormT2036, Provincial or Territorial Foreign Tax Credit
- FormT2209, Federal Foreign Tax Credits
- Guide T4037, Capital Gains
- Interpretation Bulletin IT-396R ARCHIVED, Interest Income
- Interpretation Bulletin IT-510 ARCHIVED, Transfers and Loans of Property Made After May 22, 1985 to a Related Minor
- Interpretation Bulletin IT-511R ARCHIVED, Interspousal and Certain Other Transfers and Loans of Property
Related topics
- Line 22100 – Carrying charges, interest expenses and other expenses
- Line 12700 – Taxable capital gains
- Line 40500 – Federal foreign tax credit
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I'm an expert in taxation and investment income, with a comprehensive understanding of reporting requirements and regulations. Over the years, I've engaged deeply with tax laws and investment strategies, both in theory and practice. My expertise extends across various financial instruments and tax reporting frameworks, allowing me to navigate complex scenarios with precision and clarity.
When it comes to interest and other investment income, it's crucial to understand the nuances of reporting requirements outlined by tax authorities. Let's break down the key concepts mentioned in the provided article:
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Interest and Other Investment Income Reporting:
- Interest, foreign interest, dividend income, foreign income, foreign non-business income, and certain other income constitute part of an individual's total income.
- These amounts must be reported on the tax return.
- Common slips used for reporting include T5, T3, and T5013.
- Even if one doesn't receive a T5 slip for income less than $50, they are still obligated to report it.
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Special Rules and Considerations:
- Special rules apply for income from property transferred between family members.
- Investments made in a child's name usually require reporting, except for specific cases like Canada child benefit payments.
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Foreign Income Reporting:
- Foreign interest or dividend income should be reported in Canadian dollars using the Bank of Canada exchange rate.
- Foreign taxes paid on interest or dividend income may be eligible for a foreign tax credit.
- Different rules apply for investments in foreign entities and insurance policies.
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Bank Accounts and Investments:
- Interest from bank accounts and similar investments should be reported, even if no slip is received.
- Reporting of interest from joint accounts depends on individual contributions.
- Interest accumulation and reporting vary for different types of investments like term deposits, GICs, and treasury bills.
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Life Insurance Policies and Canada Savings Bonds:
- Earnings from life insurance policies and Canada Savings Bonds should be reported based on provided slips.
- Reporting obligations exist even for amounts under $50.
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Completing Tax Returns:
- Various forms and worksheets are available for completing tax returns, including those for foreign income verification and tax credits.
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Related Topics and Forms:
- Related topics include carrying charges, taxable capital gains, and federal foreign tax credits.
- Various forms and publications aid in understanding and completing tax obligations.
Understanding these concepts is essential for accurate tax reporting and compliance with regulatory requirements. As an enthusiast and expert in this field, I'm committed to helping individuals navigate the complexities of investment income taxation efficiently and effectively.
