Do You Pay Tax on Savings Account Interest in Canada? The $50 Rule
Your bank pays you a little interest each month, and no tax slip shows up in the spring. That does not mean the interest is tax-free.
- Rules checked November 4, 2026
- By Krish Paul
- 6 min read
On this page
This guide explains how the CRA treats savings and GIC interest, why the $50 figure misleads people, and how much tax a typical balance creates.
The short answer
Yes. Interest from a regular savings account, chequing account or GIC is taxable income in Canada, and you must report all of it on line 12100 of your return, even if it is under $50 and you never get a T5 slip. The only common exception is interest earned inside a TFSA, which is generally tax-free.
The CRA says it plainly on its line 12100 page: you may not receive a T5 slip if your total investment income is less than $50, “but you must still report the income.” Interest is added to your other income, so it is taxed at the same rate as the last dollars you earn.
Why the $50 figure confuses people
The $50 rule is about paperwork, not tax. The CRA T5 guide tells banks they do not have to prepare a T5 slip for amounts paid to one person when the total for the year is less than $50. So a small balance can earn real interest and never produce a slip.
Here is how much you would need on deposit for a full year before your interest reaches $50, at a few sample rates.
| Interest rate (hypothetical) | Balance that earns $50 in a year |
|---|---|
| 1% | $5,000 |
| 2% | $2,500 |
| 2.5% | $2,000 |
| 3% | $1,666.67 |
| 4% | $1,250 |
Simple interest for one full year, before tax. Calculated by Gizly as $50 divided by the rate. Real accounts may pay a different rate on different parts of the balance.
Say you keep $1,900 in a savings account paying a hypothetical 2.5% for the whole year. You earn $47.50. Your bank may not send a T5, but that $47.50 still goes on your return. If you have accounts at several banks, add the interest from each one.
How much tax you pay on savings interest
Interest gets no special rate. It is taxed at your marginal rate, the rate on your next dollar of income. The CRA lists five federal rates for 2026: 14% on taxable income up to $58,523, 20.5% up to $117,045, 26% up to $181,440, 29% up to $258,482 and 33% above that. Your province or territory adds its own tax on top.
Take a hypothetical $10,000 in a savings account at 2.5% for a year. That earns $250 of interest. If all of it falls in one federal bracket, the federal tax ranges from $35.00 to $82.50.
At the lowest federal rate, you keep $215.00 of the $250 before provincial tax. At the top rate, you keep $167.50. If you want a full federal and provincial estimate, run your income through our income tax calculator with and without the interest.
GICs: tax on interest you have not received yet
This is the part that surprises GIC holders. With a compound GIC, interest builds up inside the GIC and is paid only when it matures. The CRA says that for most investments made in 1990 or later, you must report the interest each year as it is earned, even without a T5 slip.
The year runs from the date you bought the investment, not January to December. The CRA gives this example: if you invested on July 1, 2024, you report the interest earned up to June 30, 2025 on your 2025 return.
| Investment year | Interest earned | Report on |
|---|---|---|
| July 1, 2026 to June 30, 2027 | $150.00 | 2027 return |
| July 1, 2027 to June 30, 2028 | $154.50 | 2028 return |
| July 1, 2028 to June 30, 2029 | $159.14 | 2029 return |
| Total paid at maturity | $463.64 | Spread over three returns |
Hypothetical $5,000 GIC at 3% compounded once a year. If your GIC pays a different rate each year, the CRA says to report the amount on your T5 slips.
In this example you pay tax on $150.00 of interest for 2027, about two years before you receive any of it. Plan for that if you are counting on the full GIC payout. If you cash a GIC in early, see our guide to cashing out a GIC early.
Joint accounts
A joint account does not automatically split the interest 50/50. The CRA says you generally report your share of the interest based on how much you contributed. If you put in 70% of the money in a joint account that earned $300, you would report $210 and the other holder would report $90.
Accounts in a child’s name
Putting savings in your child’s name does not move the tax to them. The CRA says that, generally, when you invest money in your child’s name, you must report the income from those investments.
Where savings interest is not taxed
The CRA says income you earn in a TFSA, including interest, is generally tax-free, even when you withdraw. The TFSA dollar limit for 2026 is $7,000, added to any unused room from earlier years.
- Same rate, no tax$7,000 at a hypothetical 2.5% earns $175 a year. In a TFSA, that is $0 of tax instead of $35.88 federal at the 20.5% rate.
- Check your room firstYou can only contribute up to your available room. See what happens if you overcontribute to a TFSA.
- Withdrawals stay tax-freeTaking money out of a TFSA does not make the interest taxable.
How to report savings interest
- Collect your T5 slips. Check every bank and online account you had during the year.
- Add up interest with no slip. Use December statements or the year’s interest total for any account that paid under $50.
- Accrue GIC interest. For compound GICs, include interest for each complete investment year that ended in the tax year, even if not paid yet.
- Split joint accounts fairly. Report your share based on what you contributed, and keep a record of who deposited what.
- Enter the total on line 12100. Leave out interest earned inside a TFSA.
If you have not filed at all, see what happens if you file late.
Frequently asked questions
Do you pay tax on savings account interest in Canada?
Yes. Interest from a regular savings or chequing account is part of your income and is taxed at the same rates as your other income. The exception is interest earned inside a TFSA, which is generally tax-free.
Do I have to report interest under $50?
Yes. The CRA says you may not receive a T5 slip if your interest is less than $50, but you must still report the income. The $50 figure only decides whether the bank has to send a slip.
Where do I report savings account interest on my tax return?
Report it on line 12100 of your return, Interest and other investment income. Use the amount on your T5 slip, or your own total from your statements if you did not get a slip.
Do I pay tax on GIC interest before the GIC matures?
Often, yes. For most investments made in 1990 or later, the CRA says you report the interest each year as it is earned, even if it is only paid out when the GIC matures. Interest inside a TFSA is the exception.
Who pays tax on interest in a joint account?
The CRA says you generally report your share of the interest based on how much you contributed to the account. A joint name on the account does not by itself split the interest 50/50.
Is interest in a TFSA taxable?
No, in general. The CRA says interest, dividends and capital gains earned in a TFSA are generally tax-free, even when you withdraw. The TFSA dollar limit for 2026 is $7,000.
- Sources, checked November 4, 2026: CRA: Line 12100, Interest and other investment income (modified 2026-01-20); CRA: T5 Guide, Return of Investment Income (modified 2026-10-22); CRA: Tax rates and income brackets for individuals, current year (modified 2026-06-25); CRA: What is a TFSA (modified 2026-09-17); CRA: Calculate your TFSA contribution room (modified 2026-02-20).
- Method: All examples are hypothetical. Interest and tax amounts were calculated in Python with decimal rounding to the cent, then re-checked with a second method (direct multiplication for the tax figures, and the closed-form compound formula 5,000 x 1.03^3 minus 5,000 for the GIC total). Federal tax figures assume all the interest falls in one bracket and exclude provincial tax and credits.
Important: This guide is general information, not tax, legal or financial advice. Your tax depends on your total income, province and credits. Quebec provincial tax is handled by Revenu Québec. Gizly is not paid by any bank mentioned here. See our affiliate disclosure.
Send it to a friend, a family member or a coworker with the same question. It takes one tap.
How this page was made: Gizly uses AI tools to help research and draft its guides. Krish Paul, the editor, is responsible for what Gizly publishes. Spot an error? Tell us and we will fix it.
Keep reading
Compare before you switch
Rates and offers checked against each bank’s own page.
