Is GIC interest taxable if my husband is a canada resident and i am holding a visa while waiting for spousal sponsorship in process, I also never have filing Canadian taxes before?
Mrs. Joan Le
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Hi Joan,
Whether the GIC interest is taxable in Canada depends mainly on your Canadian tax residency status, not just your visa or immigration status. CRA looks at your residential ties to Canada, such as whether you are living in Canada with your spouse, rather than your immigration category alone.
If you are a resident of Canada for tax purposes, GIC interest is generally taxable and must be reported on your Canadian tax return as interest income. CRA specifically includes interest from bank accounts, term deposits, and GICs as taxable investment income.
If you became a resident of Canada during the year, you would generally report your worldwide income from the date you became a Canadian tax resident.
If you are a non-resident of Canada for tax purposes, the treatment can be different. CRA notes that interest paid to a non-resident is generally exempt from Canadian withholding tax if the payer is dealing at arm’s length with you.
Since you mentioned you have never filed Canadian taxes before, it would be important to first confirm the date you came to Canada and whether you are considered a Canadian tax resident. Once that is confirmed, we can determine whether the GIC interest needs to be reported and whether you should file a Canadian return for the first time. CRA also says that tax residency is based on residency status, not immigration status, and if you are unsure, Form NR74 can be used to request CRA’s opinion.
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