What is an investment contract?

An investment contract is any debt obligation other than those excluded by the definition of investment contract in subsection 12(11). For example, a debt obligation that provides for the payment of interest at least annually is not an investment contract because it is excluded by paragraph (i) of the investment contract definition.

A common type of investment contract would be a written agreement with a financial institution where a sum of money is invested for more than one year and the accrued interest on the funds invested is only paid at maturity (when the term of the contract expires).

On the T5 slip, enter the total of all interest accrued to each anniversary day. Do not include any interest you previously reported.

The anniversary day is:

  • the day that is one year minus a day after the day the contract was issued (and every successive one-year interval after that day)
  • the day the contract was disposed of

We consider an investment contract to be disposed of when it is converted, cancelled, sold, or redeemed.

Example

An investment contract was issued on October 29, of year 1. It is disposed of on April 7, of year 5, and all the interest is paid then. You have to prepare and file a T5 slip each year to report the interest that accrues to:

  • October 28, of year 2
  • October 28, of year 3
  • October 28, year 4
  • April 7, of year 5
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