# CSB - redemption and taxation questions



## peterk (May 16, 2010)

I've got several hundred in CS51 and CS52 series, deposited from my newspaper and lawnmowing days as a kid. They "expired" in 2008 and I recall getting something in the mail saying they would roll over and continue earning interest. 
In my paperwork I see I received a T5 in 2005 for the interest on these bonds, I'm not sure if this is a yearly thing, but I don't recall receiving T5s for these bonds in the last few years. 

So two questions, first, have I erred in not claiming any interest accrued annually on these bonds yearly (only a few dollars per years, especially since rates have plummeted), second, If I redeem them, will I receive a T5 for any tax owing on these bonds, if not, do I have a responsibility to somehow figure out what I owe on these?

My motivation for redeeming the bonds is that this (2011) is my last year of low taxation, as I'm graduating college in the spring. So if I have tax owing on these bonds I figure I should write them off now in a low tax year while I can.


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## OhGreatGuru (May 24, 2009)

Oh what a pickle you have got yourself into, through not reading the Guide to your income tax returns.

Canada Savings Bonds FAQ page: http://www.csb.gc.ca/resources/faqs/general-information/

_Each year, do I have to declare the interest on my Regular-Interest “R” and Compound-Interest “C” Bonds for taxation purposes?

Yes. All “R” bond owners and, since 1990, owners of “C” Bonds (Series 45 and up) must declare annually the interest earned during the year.

*Please note that the Canada Revenue Agency does not require us to issue T5s for amounts less than $50. For information concerning the reporting of Canada Savings Bond Investment Income (Line 121 of your tax return), contact the Canada Revenue Agency.*_

Series 51 bonds were issued in 1996. I found a financial site that said “Canada Savings Bonds Series 51, ...originally set to mature November 1, 2008 have been extended to November 1, 2018”, whcij explains how your bonds have been "rolled over".

From CRA: _There is no requirement for a T5 slip to be issued if the total amount for the year is less than $50. *Report the interest paid or credited to you in the tax year on line 121 of your return.*_

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/121/csb-eng.html

So, you should have been reporting the interest annually all along. When you cash the bonds you will receive all the interest, but you will only get a T5 (if over $50) for the last year, because the issuer assumes you have been declaring the interest annually all along. If CRA figures out that you haven't previously declared the interest, they won't be assessing it as income in the year you cashed out - they will be reassessing all your returns since 1997, with interest penalties for undeclared income.


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## peterk (May 16, 2010)

That's what I was afraid of... thank goodness it is only a few hundred.

Now, i didn't mention this, and hopefully this will save my ***... but I've never actually had a net income tax bill ever. I'm a student afterall. So I don't think I would actually owe any tax on the interest even if I were claiming it properly.
Given that, should I just claim the annual 2011 interest on my tax return next spring, or would it be more appropriate to claim the entirety of the interest earned? Obviously since I haven't claimed each year this affects my total earned income each year, and how I've used my tuition credits up for the past 5 years. All of this only amounts to a few bucks a year...


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## OhGreatGuru (May 24, 2009)

You are asking for advice on how to dodge the tax man, which most of us on this forum are reluctant to give on a public forum. I think the more ethical way would be to declare all the interest and take your lumps. But if it's over $50 CRA is going to wonder why there is no accompanying T3. So a case can be made for only declaring the 2011 interest and seeing if CRA questions it. In the unlikely chance that they do (I'll bet there are 10's of thousands of unreported small interest earnings every year), it doesn't sound as if the reassessments would end up costing you much, if anything.


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## ghostryder (Apr 5, 2009)

peterk said:


> That's what I was afraid of... thank goodness it is only a few hundred.
> 
> Now, i didn't mention this, and hopefully this will save my ***... but I've never actually had a net income tax bill ever. I'm a student afterall. So I don't think I would actually owe any tax on the interest even if I were claiming it properly.
> Given that, should I just claim the annual 2011 interest on my tax return next spring, or would it be more appropriate to claim the entirety of the interest earned? Obviously since I haven't claimed each year this affects my total earned income each year, and how I've used my tuition credits up for the past 5 years. All of this only amounts to a few bucks a year...



I would have a close look at some of your Notice of Assessment's from prior years. Even though you may not have been sent a T5 slip, CSB would have sent their "copy" of the T5 info to CRA. 

I would think it likely that the CRA may have already adjusted your return(s) from prior years when they "matched" your return with the numbers that are reported by the T5 issuer.

It's happened to me before when I have missed reporting a T5 or T3 or even if I made an typo entering in the amounts from the T-slips.


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## Eclectic12 (Oct 20, 2010)

peterk said:


> That's what I was afraid of... thank goodness it is only a few hundred.
> 
> Now, i didn't mention this, and hopefully this will save my ***... but I've never actually had a net income tax bill ever. I'm a student afterall. So I don't think I would actually owe any tax on the interest even if I were claiming it properly.
> 
> ...


My understanding is that you need to file a change to each of the affected tax returns, using the process indicated by url:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/chngrtrn-eng.html

CRA will want to do it this way to adjust the affected yearly item. While it is tedious, it is to your benefit as well. A few dollars applied to each tax return is going to have far less of an impact compared to many years combined.

As others have posted, double check that the reported T5's haven't already been applied. Did any of the notice of assessments indicate differences from what you filed?

You can also call CRA or signup for the "My Account" feature to get more details and make the changes online.

http://www.cra-arc.gc.ca/esrvc-srvce/tx/ndvdls/myccnt/menu-eng.html


Cheers


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