Quick answer
A compound GIC adds each year's interest to the principal, so interest earns interest, and in Canada in 2026 CRA requires it to be reported each year as it accrues in a non-registered account, not only at maturity. In the calculator's own example, $10,000 for 3 years at 4.00% compounding annually matures at $11,248.64, with $1,248.64 of interest.
Compound vs. simple interest: why the type matters more than the rate
A compound GIC reinvests each year's interest straight into the principal and pays out nothing until the GIC is cashed or matures — a GIC may compound semi-annually or monthly rather than annually, but the mechanic is the same: interest earns interest. An annual-pay (simple-interest) GIC instead pays that year's interest out in cash every year without adding it to the principal, so the balance stays flat and the dollar amount earned never grows. Comparing two GICs at the same headline rate without checking which type you're looking at can hide a difference in what a multi-year deposit is actually worth.
Worked example — $10,000 non-registered, 3 years at 4.00%, compounding annually, Ontario
Year 1: the opening balance of $10,000.00 earns 4.00% = $400.00, reportable that tax year under the CRA's anniversary-day rule, bringing the balance to $10,400.00. Year 2: $10,400.00 × 4.00% = $416.00, balance $10,816.00. Year 3: $10,816.00 × 4.00% = $432.64, maturity value $11,248.64. Total interest over the term is $1,248.64 — but it's reported across three separate tax years, not lumped at maturity, even though nothing is actually paid out until the GIC matures. Each year's interest is taxed on top of that year's other income: this calculator works out income tax with the interest added to taxable income and without it, using the shared take-home pay engine, and the difference is the tax on the interest. With $90,000 of employment income, no year's interest reaches a point where the tax rate changes, so the tax is 29.65% of the interest every year, the same as the marginal rate: $118.60, $123.34 and $128.28, leaving $281.40, $292.66 and $304.36 after tax in years 1 through 3 — $878.42 in total, versus $1,248.64 pre-tax, even though the cash to pay that tax has to come from somewhere else until the GIC actually pays out.
The same GIC with $73,000 of employment income shows why the method matters. Taxable income is $72,305 after the enhanced CPP deduction, inside the $600 band from $72,000 to $72,600 where the Ontario Health Premium rises by 25 cents for every dollar, so the marginal rate there is 54.65%. But the premium stops rising at $750, $295 further on, and each year's interest carries income past that point: the tax on it is 29.65% of the interest plus the last $73.75 of premium, or $192.35, $197.09 and $202.03 (48.09%, 47.38% and 46.70% of each year's interest). After-tax interest totals $657.17; taxing all of it at 54.65% would have left $566.26.
Worked example — $25,000 in a TFSA, 5 years at 3.75%: compounding vs. simple
Compounding annually: $25,000 × 1.0375⁵ = $30,052.50 at maturity, $5,052.50 in total interest. Paid out annually instead, never reinvested: a flat $937.50 a year, every year, for $4,687.50 collected in cash over five years, with the account itself still sitting at $25,000 the whole time. The compounding advantage here is $365.00 — money that exists purely because interest was left to earn interest instead of being paid out along the way. Since this example is inside a TFSA, where CRA says interest is generally tax-free, no tax is worked out on either figure; the comparison is pure compounding mechanics.
Worked example — a $50,000 five-rung ladder
Split into five $10,000 rungs at rates of 3.50% (1yr), 3.60% (2yr), 3.70% (3yr), 3.80% (4yr) and 4.00% (5yr), each compounding annually to its own maturity: $10,350.00, $10,732.96, $11,151.58, $11,608.86 and $12,166.53. Because the five rungs mature on five different calendar dates rather than all at once, the $56,009.93 ladder total is a nominal sum across those dates, not a single point-in-time account balance — but it's still $6,009.93 of interest across the whole ladder, with a portion of the money freed up on a predictable annual schedule instead of locked away for five years at once.
The CRA's anniversary-day accrual rule
Since a compound GIC held more than a year pays nothing out until it matures, it would be easy to assume tax is only owed at maturity too — it isn't. The CRA requires interest income on a compound investment to be reported each year as it accrues, on the anniversary of when it was acquired, whether or not any T5 slip was issued for that year (a payer only has to issue one when it pays $50 or more to a recipient in a year; the recipient must still report every dollar regardless). A GIC bought partway through a year and maturing five years later might not generate its first T5 until the second calendar year, once the first full anniversary has passed, with T5s following for each year after that. The practical effect is a cash-flow mismatch worth planning around: tax comes due annually on money you can't actually touch until the GIC matures.
TFSA, RRSP/RRIF, FHSA or non-registered
The account the GIC sits inside changes the tax treatment, not the GIC itself. For a TFSA, CRA says income earned through interest is generally tax-free, even when you make a withdrawal; a contribution beyond your room is taxed, and your room is not modelled here. For an RRSP or RRIF this calculator works out no tax on the interest while it stays in the plan, and does not work out the tax on a withdrawal: CRA says amounts withdrawn from an RRSP or RRIF must be included as income in the year received, so that tax depends on your income then, which could be decades away or next year. CRA describes an FHSA as a registered plan for saving tax-free toward a qualifying first home, up to certain limits; a qualifying withdrawal is tax-free, while a withdrawal that does not meet the conditions may be a taxable withdrawal that must be included as income. FHSA contributions, limits and withdrawals are outside this calculator's scope, and it works out no tax on an FHSA's interest. A non-registered account gets none of that shelter: the anniversary-day rule applies in full, and every year's interest is taxed as ordinary income on top of whatever else you earn that year.
CDIC vs. provincial credit-union deposit insurance
CDIC insures eligible deposits, GICs included, at its member institutions, which include banks, federally regulated credit unions, and trust and loan companies. The limit is $100,000 (principal plus interest) per depositor, per member institution, separately in each of nine categories: deposits held in one name, joint deposits, RRSP, RRIF, TFSA, RDSP, RESP and FHSA deposits, and deposits held in trust. A GIC is a type of deposit, not a category: it counts in whichever category it is held, together with any other eligible deposits in that category at the same institution, and deposits made under a member's trade name count with the member's own. Since 30 April 2020, deposits with terms over five years are eligible too.
A federally regulated credit union is a CDIC member, so a GIC there is insured by CDIC, not by a provincial insurer: British Columbia's CUDIC, New Brunswick's NBCUDIC and Nova Scotia's NSCUDIC each say they do not cover federal credit unions. CDIC's list of member institutions, read on 11 October 2026 (it prints no date; its page record is dated 23 July 2026), names these credit unions (trade names in brackets): Caisse populaire acadienne ltée (UNI, UNI Business, UNI Financial Cooperation); Coast Capital Savings Federal Credit Union (Coast Capital, Coast Capital Savings, Prospera, Sunshine Coast Financial); Innovation Federal Credit Union; and Tru Cooperative Bank (Enderby & District Financial, Envision Financial, Island Savings, Valley First). The list changes: Tru Cooperative Bank, formerly First West Credit Union, joined CDIC on 1 April 2026; ABCU Credit Union joined the federal framework by merging into Innovation Federal Credit Union on 1 April 2026; and Prospera Credit Union and Sunshine Coast Credit Union did the same by merging into Coast Capital Savings Federal Credit Union on 6 May 2026. Check CDIC's list for your own credit union.
A deposit made at a credit union before it became a federal credit union, or before it merged into one, keeps for a time the same coverage its provincial insurer offered, now given by CDIC. CDIC's notices of 1 April and 6 May 2026 say that for a term deposit such as a GIC this lasts until the deposit matures or is cashed out, that for demand deposits it lasts 180 days, that a withdrawal reduces it, and that deposits made on or after the change get CDIC's regular coverage; the CDIC Act (section 12.1) provides for it where a credit union is continued as a federal one, with a transition period that for a deposit repaid on a fixed day runs to that day. This calculator does not model that: for a federal credit union it shows CDIC's regular limit.
Provincially regulated credit unions and caisses populaires are insured by their province's insurer instead, with different limits; the limits in this paragraph are not a federal credit union's, which is CDIC's as described above. British Columbia's CUDIC, Alberta's CUDGC, Saskatchewan's CUDGC and Manitoba's DGCM each guarantee credit-union deposits with no dollar limit. Ontario's FSRA caps non-registered deposits at $250,000 and leaves registered deposits (RRSP, RRIF, TFSA, FHSA and the rest) uncapped. New Brunswick caps coverage at $250,000 per category; Nova Scotia at $250,000 per account type, with each registered RRSP, RRIF, TFSA or RESP contract insured separately and no FHSA named; and Newfoundland and Labrador at $250,000 per type of deposit. Prince Edward Island caps non-registered deposits at $250,000 and says it insures registered deposits (RRSP, RRIF, TFSA, FHSA) in full, subject to insurability, but its FAQ also says that deposits must be repayable no later than five years after the date of deposit and that a term deposit locked in for longer than five years is not insured, registered plans included, so for a Prince Edward Island credit-union GIC with a term over five years the insurance line says the FAQ treats it as not insured. That rule is in the FAQ, not in the Credit Unions Act, and the FAQ does not say how a longer GIC that can be cashed within five years is treated. Quebec's AMF caps coverage at $100,000 per category of deposits, per person and per authorized deposit institution, principal and accrued interest included. Neither the guarantee in Quebec's Deposit Institutions and Deposit Protection Act (section 33.1) nor the regulation's definition of a deposit of money (section 1) sets a limit on the term. The Act does not apply to deposits whose term exceeds one prescribed by the regulations (section 1.1), and none of the five regulations numbered under it (chapter I-13.2.2, r. 1 to r. 5) prescribes one.
Where a limit is in dollars it counts principal plus interest (CDIC, FSRA, the AMF, NBCUDIC, NSCUDIC, PEI CUDIC and Newfoundland and Labrador's CUDGC each say so in their own documents), so the figure to check is what the GIC grows to, not what went in. These limits apply to your deposits together, not to one GIC: CDIC combines your eligible deposits in one category at one institution, and the provincial insurers with a dollar limit combine your deposits at one credit union by their own categories or account types (Nova Scotia insures each registered contract separately). So the insurance line compares this one GIC alone with the limit, and your other deposits in the same category count toward it too. A $260,000 non-registered GIC at a provincially regulated credit union is fully covered in British Columbia, Alberta, Saskatchewan and Manitoba, and is over the limit in Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador ($250,000) and in Quebec ($100,000). At a bank or a federal credit union it is $160,000 over CDIC's $100,000, whichever province you pick. A $150,000 RRSP GIC at a Quebec caisse is likewise $50,000 over the AMF's per-category limit. The insurance line checks your GIC's own peak balance, term, account type, institution type and province against all of this, and shows "unconfirmed" rather than a figure for a credit union in the Northwest Territories, Nunavut or Yukon (see below).
How a GIC ladder actually works
A ladder splits one lump sum into equal portions across several terms — a five-rung ladder of 1 through 5 years is the version this calculator shows, and the one RBC Royal Bank illustrates on its GIC laddering page — so that each rung earns its own term's rate and matures on its own schedule. Once the 1-year rung matures, it gets reinvested into a fresh 5-year rung; the next year, the rung that was originally 2 years does the same; and so on, until every rung is a 5-year term and one of them matures every single year from then on. That returns a slice of the money on a predictable annual schedule — a middle ground between locking everything away for five years and leaving it all in a 1-year GIC that has to be renewed, and re-rated, every year.
What this doesn't model
This calculator assumes a GIC held to its full term with no early cashing, so it does not model an early-redemption penalty on a cashable/redeemable GIC, a market-linked GIC whose return depends on an index rather than a fixed rate, a foreign-currency GIC, a promotional or limited-time rate that reverts after an introductory period, or a brokered GIC held through an investment dealer (which can carry different insurance treatment than one held directly with the issuing institution). For the non-registered after-tax figures it taxes every year's interest on top of the same employment income, under 2026 rates, for the whole term, when your income and the rates themselves can change between now and a GIC's maturity years from now. It also treats the income you enter as a salary with nothing else beside it, so a pension or other investment income is left out, and so is anything else that depends on income and moves with the interest: the age amount, the OAS clawback, Ontario's low-income (LIFT) credit, Quebec's health services fund contribution and income-tested benefits such as the Canada Groceries and Essentials Benefit (formerly the GST/HST credit). And it does not model a deposit insurer for credit unions in the Northwest Territories, Nunavut or Yukon, because no source naming one was found — rather than guess a number, the insurance line marks those three "unconfirmed". What was found: Bill 13 of the Northwest Territories, assented to on 6 November 2012, repeals its Credit Union Act; the credit union act published on Nunavut's legislation site (the Northwest Territories' 1988 Act as amended to 1998) sets up a guarantee reserve fund and a stabilization fund, and a search of it for deposit insurance found no insurer, though it was not read in full; Yukon was not searched. It also does not model the transitional provincial coverage of a term deposit made before a credit union became a federal credit union (described above), or the other deposits you hold in the same category at the same institution, which count toward the same limit.
FAQ
What is the difference between a compound GIC and one that pays interest annually?
A compound GIC reinvests its interest into the principal every year (or every six months, or every month, depending on the product) and pays out nothing until the GIC is cashed or matures — each year's interest is calculated on a growing balance, so the dollar amount earned rises every year even at a flat rate. An annual-pay (simple-interest) GIC instead pays that year's interest out in cash every year without adding it to the principal, so the balance never grows and the dollar amount earned is identical every year. Over a multi-year term a compound GIC ends up worth more in total, because part of what it pays is interest on interest that an annual-pay GIC never accumulates.
Why do I owe tax on GIC interest I haven't actually received yet?
The CRA's anniversary-day accrual rule requires you to report interest income each year as it accrues on a compound investment held more than one year, even though a compound GIC pays nothing out until maturity and even if no T5 slip was issued for that year. A payer only has to issue a T5 when it pays a recipient $50 or more in a year, but the recipient must still report every dollar of accrued interest regardless of whether a T5 arrived. This is why a multi-year compound GIC can create a real cash-flow mismatch: you owe tax on interest you can't touch until the GIC matures.
Does it matter whether my GIC is inside a TFSA, an RRSP or a non-registered account?
It changes the tax, not the GIC itself. CRA says income earned in a TFSA through interest is generally tax-free, even when you make a withdrawal, but a contribution beyond your room is taxed (room is not modelled here). For an RRSP or RRIF this calculator works out no tax on the interest while it stays in the plan; CRA says amounts withdrawn from an RRSP or RRIF must be included as income in the year they are received. CRA describes an FHSA as a registered plan for saving tax-free toward a first home, up to certain limits: a qualifying withdrawal is tax-free, and a withdrawal that does not meet the conditions may be a taxable withdrawal, which must be included as income. This calculator does not model FHSA contributions or withdrawals. Interest in a non-registered account has no such shelter — the CRA's anniversary-day accrual rule applies in full, and every year's accrued interest is taxed as ordinary income that year, on top of whatever else you earn, whether or not you've received any cash.
What is the difference between a cashable and a non-redeemable GIC?
A cashable (redeemable) GIC can be cashed in before the end of its term, and a non-redeemable GIC is held to maturity. The issuer's disclosure documents say when a cashable GIC can be cashed in and at what interest rate, and whether a non-redeemable one has any exceptions. This calculator assumes a GIC held to its full term either way and does not model an early-redemption penalty or a lower rate for early cashing.
What does CDIC actually cover, and what does it not cover?
CDIC insures eligible deposits, including GICs, at its member institutions: banks, federally regulated credit unions, and trust and loan companies. The limit is $100,000 in principal plus interest per depositor, per institution, separately in each of nine categories: deposits held in one name, joint deposits, and registered plans including RRSP, RRIF, TFSA, RDSP, RESP and FHSA, plus deposits held in trust. Other deposits you hold in the same category at the same institution count toward the same limit. Since 30 April 2020 deposits with terms over five years are eligible too. Provincially regulated credit unions and caisses populaires are insured by their province's deposit insurer instead, with different limits (several offer unlimited coverage). CDIC does not insure mutual funds, stocks and bonds, exchange traded funds or cryptocurrencies.
How does a GIC ladder work?
A GIC ladder splits one lump sum into equal portions across several terms — for example five rungs of 1, 2, 3, 4 and 5 years, as this calculator shows — each earning that term's own rate and compounding to its own maturity date. Once the 1-year rung matures, you reinvest it into a new 5-year rung, and the following year the (formerly 2-year, now matured) rung does the same, so that after the first five years one rung matures every single year. That gives you a portion of your money back on a schedule instead of locking it all away for five years at once.
This page is general information based on published 2026 CRA, CDIC and provincial deposit-insurer rules, not tax or financial advice. Rates and terms are set by individual institutions and change constantly — check the actual GIC's disclosure documents before buying.