GIC Calculator
Interest, maturity value and after-tax return on a Canadian GIC
Your GIC
Growth to maturity
GIC summary
Year by year
| Year | Opening value | Interest earned | Value at year end |
|---|---|---|---|
| 1 | $25,000.00 | $1,062.50 | $26,062.50 |
| 2 | $26,062.50 | $1,107.66 | $27,170.16 |
| 3 | $27,170.16 | $1,154.73 | $28,324.89 |
| 4 | $28,324.89 | $1,203.81 | $29,528.70 |
| 5 | $29,528.70 | $1,254.97 | $30,783.67 |
How a GIC works in Canada
A GIC is a deposit with a bank or credit union that guarantees your principal and pays a set rate for a fixed term. The rate is locked when you buy, so the outcome is known to the penny on day one.
The four ways interest is paid
A GIC quoted at the same rate can pay noticeably different amounts depending on how the interest is handled. Compounded annually adds each year's interest to the balance, so the next year earns interest on interest. Compounded monthly does the same twelve times a year and finishes slightly ahead again. Simple interest paid at maturity accrues at a flat rate on the original principal and never compounds. Simple interest paid out annually earns the same total, but the money reaches your bank account each year instead of staying in the GIC. Terms shorter than a year are almost always quoted this way. On $10,000 at 4% for five years, simple interest pays $2,000, annual compounding pays $2,167 and monthly compounding pays $2,210. Same headline rate, three different answers.
The accrual rule, and why it hurts
GIC interest is fully taxable as ordinary income at your marginal rate. There is no dividend tax credit and no 50% capital gains inclusion, which makes it the least tax-efficient investment income in Canada. Worse, the accrual rule requires you to report the interest in the year it is EARNED, not the year it is paid. A three-year compounding GIC that pays nothing until maturity still generates a tax bill in years one and two, on money you have not received. The year-by-year table above shows exactly which year each dollar becomes taxable. This is why a GIC belongs in a TFSA, RRSP or FHSA whenever you have the room. Inside a registered account the accrual rule is irrelevant and you keep the whole amount.
Deposit protection
GICs at CDIC member institutions are insured up to $100,000 per depositor, per insured category, per institution. Deposits held individually, jointly, in a TFSA, in an RRSP, in a RRIF and in an FHSA are separate categories, each with its own $100,000 of coverage at the same bank. Provincial credit unions are covered by provincial deposit insurers instead, and several provinces offer unlimited coverage. Check who insures the institution before you commit more than the limit.
Assumptions
The rate is assumed fixed for the whole term, which is true of a standard GIC but not of a market-linked one, where the return depends on an index and can be zero. The after-tax figures apply a single marginal rate to all the interest. In practice a large interest payment can push you into a higher bracket, and the accrual rule spreads the income across years, so your real tax will vary slightly. Early redemption is not modelled. A non-redeemable GIC generally cannot be cashed early at all, and a redeemable one usually forfeits accrued interest if you break it inside the waiting period.
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Frequently Asked Questions
Last updated: July 2026
At 4% for five years, compounded annually, $10,000 grows to $12,166.53, so $2,166.53 of interest. The same rate compounded monthly pays $2,209.97, and simple interest pays exactly $2,000. Same posted rate, three different answers, which is why the interest type selector matters as much as the rate.
Yes, in a non-registered account. Canada's accrual rule requires you to report GIC interest in the year it is earned, not the year it is paid. A three-year compounding GIC that pays nothing until maturity still generates a T5 and a tax bill in years one and two. The year-by-year table on this page shows which year each dollar becomes taxable.
Reviewed by Alexandre Bernier, CFP®, CIM®
Educational tool - estimates only. Not individualized financial, investment, tax, or legal advice. Using it does not create an advisor-client relationship. Rules and figures change; verify against current CRA sources and consult a qualified professional. Editorial policy →