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Question 1

What tax treatment applies to the annual investment income earned on guaranteed investment certificates (GICs) in a non-registered account?

Answer 1

For investments not held in registered plans taxpayers are required to report interest income (from such investments as CSBs, GICs and bonds) on an annual accrual basis, regardless of whether or not the cash is actually received.

Question 2

is interest on funds borrowed to contribute to registered accounts tax deductible?

Answer 2

Interest paid on funds borrowed to contribute to a registered retirement savings plan, a registered education savings plan, a registered disability savings plan, or a tax-free savings account (TFSA), is not tax-deductible because the borrowed funds are used to earn investment income that is tax-exempted.

Question 3

Past Service Pension Adjustment (PSPA)

Answer 3

PSPA - difference between the old plan PA and the new plan PA. The PSPA also reduces the amount an employee can contribute to an RRSP.