Treasury Bill (T-Bill)
Bon du Trésor in French
Quick definition
A treasury bill (T-bill) is short-term Government of Canada debt with terms of about 3, 6 or 12 months. It pays no coupons: you buy it at a discount and receive its full face value at maturity, and that difference is your return.
How a T-bill works
A T-bill is the simplest security the government sells. Unlike a bond, it pays no coupons: you buy at a discount, say $97.60 for $100 of face value, wait a few months, and collect the full $100. The quoted rate is simply that discount expressed as an annualized yield to maturity.
One tax detail deserves a clear line: even though the gain looks like price appreciation, the CRA taxes a T-bill's discount as interest income, fully taxable at your marginal rate, not as a capital gain. In a taxable account, a T-bill is taxed exactly like GIC interest.
Canada's risk-free benchmark
T-bills are the closest thing to a risk-free asset in Canadian dollars, and their yield is the benchmark risk-free rate that underpins pricing across Canadian finance. The Bank of Canada auctions them every two weeks on the government's behalf, and their yields track the policy rate closely.
Retail investors can buy T-bills directly through most brokerage bond desks, but in practice most hold them indirectly: money market funds and T-bill ETFs hold little else, trade in one click, and handle the constant rolling as bills mature every few months. Provinces issue their own T-bills too, at slightly higher yields for a provincial rather than federal guarantee.
T-bills or GICs?
T-bills win on liquidity: they can be sold any business day at market price, with no penalty and no negotiation, while a non-redeemable GIC locks your money in for the term. Their guarantee also needs no insurer: there is no CDIC limit to think about, because the promise is the Government of Canada itself, in any amount.
GICs answer back with yield and simplicity. Posted GIC rates from competitive banks often sit slightly above T-bill yields for the same term, and there is nothing to trade or roll. For money with a fixed date and no chance of an early need, a GIC often pays better; for money that must stay reachable, T-bills, usually via a T-bill ETF, are the cleaner tool.
In Canada
The 3-month Government of Canada T-bill yield is quoted daily and serves as the standard risk-free rate in Canadian textbooks, valuation models and fund benchmarks. When headlines talk about cash finally paying a decent yield, T-bill ETFs and money market funds are usually the products being described, and their yields adjust within days of each Bank of Canada rate announcement.
Worked example
You buy a 6-month T-bill with $10,000 of face value for $9,760. At maturity you receive $10,000, a gain of $240: about 2.46% over six months, or roughly 4.9% annualized (approximate, convention math). In a taxable account, the full $240 is taxed as interest at your marginal rate, exactly as if a GIC had paid it.
Reviewed by Alexandre Bernier, CFP®, CIM®, PFP®·Updated July 2026