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One year GIC held by corporation - GIFI code?

A corporation purchased a cashable one-year $15,000.00 GIC.
At year-end $5,000.00 remains uncashed and $50.00 in interest has been earned.

Are the following GIFI codes correct?
GIFI 1180 Short-term investments - $5,000.00 GIC
GIFI 8094 Interest from other Canadian sources - $50.00 interest earned (or GIFI 8090 - Investment Revenue)

Thanks kindly

I doubt that I would read ITA S12 like that in this case, but I am not looking at the documents themselves.
I would suggest re-checking ITA Section 12, particularly S12(11) definitions for “investment contract”, and specifically para (i) of that definition.
Presumably the GIC issuer would be issuing the correct slips.

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@joe.justjoe1

(i) an obligation in respect of which the taxpayer has (otherwise than because of subsection (4)) at periodic intervals of not more than one year, included, in computing the taxpayer’s income throughout the period in which the taxpayer held an interest in, or for civil law a right in, the obligation, the income accrued on it for those intervals,

I have read this - what are you suggesting?

Thanks kindly

New here, moved over from Taxprep.

I though the original question was which GIFI code to use? If so, I would think 1180 and 9080 is fine. I come from the camp of “less is more” and I try to stick to generic lines where I can. I’ve never had CRA complain that interest from Canadian sources should’ve been on 8094 vs 8090. I only use lines that appear on a client’s financial statement and I don’t split lines out for the purposes of the GIFI.

Of course, depends on what you are engaged to do…

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@echan Sounds good - thanks for the response!

I’m suggesting that tax accountants should ideally strive to ensure correctness that income for tax purposes is included or not included pursuant to the Income Tax Act (in this case, particularly Section 12), rather than by some allocation that a bookkeeper may or may not have made for bookkeeping or accounting purposes.

There are often tax divergences for items involving ITA S12, and hence, likely I would allocate it differently that what is suggested in your post, as different S12 treatment would appear to be appropriate.

You can probably find references also in more straight-forward English in things like Guide T4015.

However, you appear to be only dealing with $50, not $50 million, so we are not moving mountains here.

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I am curious as I’m always open to learning. I came from Big4 land and into the SME space on my own which is an adjustment. What different treatment would you be suggesting?

I would assume the interest is either accrued interest or actual cash interest. Would it not be appropriate to code to investment revenue?

I wouldn’t have expected the anniversary day rule to kick in since its a one year cashable GIC?

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I did give several references above, not sure what further I could add?

I understood from the OP that the terms of the relevant contract was that there was no triggering option exercised obliging entitlement to the $50 in the relevant time period.

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Have reclassified this from T2 to Taxtopics…

May I suggest that the original poster, instead of asking this kind of question on this forum, instead upgrade his accounting and tax knowledge…

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Chiming in from TaxCycle here. Just to be clear, this forum welcomes topics on accounting and tax questions, even if they are basic to some of the more experienced preparers. This is meant to be a safe place where ALL preparers can ask questions and we hope that the more experienced will assist when they feel it is appropriate. If you don’t want to answer a question because you feel it is too basic, leave it there for someone else to address.

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I know you are in a thorny position, Elizabeth, and yes, it is helpful if the Taxcycle forums are “safe” places.
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Unfortunately, sometimes some questions on the forums (and I am speaking generally, and NOT specifically singling out this poster or this thread or this question) are in more a grey area of a situation of “protection of the public” and “in the public’s best interests” more than whether a particular question is “basic”, or “not basic”. If such questions occur, it becomes an ethically difficult one to diplomatically address, since it is not really ethical to ignore such a matter.
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Whereas it is harmless to be asking a “basic” question, or a “complex” question in a classroom setting, the same is not necessarily true when it affects the client (“public”). Questions on these forums are generally ones that are being inflicted on the public, rather than theoretical classroom ones.
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Professionally Designated members / preparers have very strict mandatory Codes that MUST be followed to accept/decline assignments/cases where they do not have sufficient requisite expertise, and are under a duty to inform a client, for example: “Sorry, I am re-referring you, as I don’t know how to prepare your tax return with your information, because I am only comfortable with my skills to prepare tax returns which involve only filling in the T-slips in the boxes provided by tax software”
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Sometimes questions (again, I specifically note that I am speaking generally in the forums, and NOT singling any user or question out) indicate a more fundamental problem, suggesting that a preparer with more advanced tax law skills or more advanced accounting skills should be looking at that particular client’s file, in the client/public’s best interests. Such (thankfully few) questions are the ones that are problematic, since they are simultaneously both difficult to address and difficult to ignore.
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Perhaps this thread should be split, so not to ‘dirty up’ the original thread…

Please note that I understand the position of Taxcycle, in that it wants the forum to be a friendly place, oozing with goodwill, as one of the sales tools of excellent software you produce.

However, that can only go so far.

One of the reasons for my ‘offending’ post is that I am trying to keep the forum a friendly place, and also a safe place for practitioners to get their questions answered.

The problem you are starting to experience on the forum is what also lead to the demise of the old Greenpoint software forum, which is, that people start posting all sorts of questions which, to even be a practitioner, they should have the answer to, or be ashamed to even ask. The asking of these questions are going to, and are now receiving responses by seasoned practitioners, who are tired of the constant barrage of that certain class of posters. And it is fine if they occasionally have a ‘dumb’ question, we all have off ‘duh’ moments.

NOTABENE it is in my best interest, as well as yours, that the Forum remains a nice place to ‘hang out’. I am doing what I can to keep it so.

Please be assured Elizabeth, that I am on the site of Taxcycle. And because of that, I will tell you frankly when are doing something well, and will also tell you frankly when you can improve…

Please note that however, there should be a strict rule against ‘ad hominem’ comments. Any such comments, no matter how slight, should be forthwith censured. I hesitate to be moderating on where I am being criticized, otherwise I would have already done so. Instead, I have limited my action here to self-defense.

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The forum would be a friendlier place if those who think the question can’t be answered, wouldn’t. If you don’t think you have enough information or if the question is too basic, feel free to ignore it. Thanks, Elizabeth, for your comments.

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@Elizabeth – thanks for stepping in and providing some guidance here.

We are trying to create a friendly and helpful community in this space. We have avoided moderating the discussions for the most part, and I would like to keep it that way.

I would ask everyone to be respectful and keep the discussions productive.

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@joe.justjoe1
@echan

Thanks for the responses

With respect, I would suggest that there is, in tax, almost NO definably “correct” response to any slightly complex situation. There are shades of grey varying from not quite white to not quite black…and the issue of materiality also emerges.

I am strongly of the opinion that - regardless of what my professional association(s) may think - that my function is to support my client in locating the best possible tax strategy and results that fall within the law. One may end up in an argument with CRA (we’ve all done that!) over whether something falls within a given section of the ITA or not…but that is also what forums are for. To wrestle over approach.

It is most clearly NOT my requirement to either help CRA, audit for CRA or do anything else to support that organization in its quest to wrest funds from clients.

Materiality is another issue as pointed out above: my approach might be quite different if it didn’t involve $15 in tax vs, (say) $15,000.

As always - respectful discussion is good. That is one of the reasons I like both this and other tax forums (fori? fora?) where we can learn from others’ experience and wisdom.

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