Canada Savings Bonds | Financial Crooks

My children have a collection of Canada Premium Bonds given to them over the years by a kind relative. The rate of return in recent years on these bonds has been shockingly low but the principal is safe and the donor is happy. Recently, though, I’ve been able to coax the donor into allowing me to move some of the money into another investment for the children which will at least keep up with the rate of inflation so the value of the gift is not diminishing over time. That led me to wonder how I could determine the value of any given Canada Savings Bond or Canada Premium Bond if it is redeemed early.

How to Look Up the Cash Value of a Canada Premium Bond With Compound Interest Which Has Not Matured

I knew the government had the redemption values for Canada Savings Bonds on the internet but it took a bit of clicking to get to the correct page.

To check the value of your bond, first check which series it is. The series will be part of the numbers on the front of the printed bond. Look for CP and a couple of digits.

Next, go to the redemption tables available online at
http://www.csb.gc.ca/fis/redemption-tables-s40/?type_select=1&bond_type=P&interest_type=C

Click on the link with the name of your bond series. For example, I clicked on CP52.
The table will display the value of each of the different sizes or face values of bonds listed across the page in columns, such as $100, $300, $500, $1000 etc.

You look for the correct column, then read down the page to the month you plan to cash the bond. For example, I looked at the December 2015 column.

Is There a Penalty for Cashing a Premium Canada Savings Bond Early?

Sort of.

When you look up the redemption value for a bond, you’ll notice the values in most rows are the same. That’s because for these bonds, you lose any interest earned since the last anniversary of the purchase if you cash the bonds before the next anniversary.

That means that if the bond was issued with a November 1 date, if you cash it in any following year in November, you will receive each of the previous years’ interest payments. But if you cash it in December-October, you will forfeit any interest it was trying to earn during those extra months. You will receive the interest earned for all the years up till the most recent November 1, though.

So by cashing a CP52 bond in December, I am forfeiting any interest earned after November 1 2015. But I’m getting the interest earned in 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, and 2015 until November 1.

How to Look Up the Cash Redemption Value of a Canada Premium Bond with Regular Interest

Similarly, if you know the series number (typed on the front of your paper bond) for a Premium Bond with simple or regular interest, you can look up its redemption value online.

Go to http://www.csb.gc.ca/fis/redemption-tables-s40/?type_select=1&bond_type=P&interest_type=R

Click on the series number for your bond. For example RP75.

Note that if you cash these types of bonds in the wrong month, you will get paid LESS than the face value of the bond. That is because you were already paid some interest in advance of earning it.

How to Look Up the Cash Redemption Value of a Canada Savings Bond with Compound Interest

Go to http://www.csb.gc.ca/fis/redemption-tables-s40/?type_select=1&bond_type=S&interest_type=C

Click on the link for the series of the bond you own. For example, click on CS115.

How to Look Up the Cash Redemption Value of a Canada Savings Bond with Regular Simple Interest

Go to http://www.csb.gc.ca/fis/redemption-tables-s40/?type_select=1&bond_type=S&interest_type=R

Click on the link for the series of the bond you own. For example, click on RS115.

How to Look Up the Value of Matured Canada Savings and Premium Bonds

As usual, you will need to check the series number printed on the front of your bond.
Then choose one of the following pages to look at:

For Canada Savings Bonds in series 1 – 31

Read the details by going to page
http://www.csb.gc.ca/fis/redemption-tables-s40/?bond=S115&interest=1

And clicking on the blue link “Matured Old Style Canada Savings Bonds (Series 1-31)

Then click on the link to the PDF file.

For Canada Savings Bonds in series 32-45

For regular simple interest bonds, the value is the face value because all of the interest has already been paid.

For compound interest bonds, look them up in the table at http://www.csb.gc.ca/wp-content/uploads/2009/11/matured_s32-s45.pdf

For Canada Premium Bonds

For Compound Interest bonds, click on the link for the series of your bond at
http://www.csb.gc.ca/fis/redemption-tables-s40/?type_select=1&bond_type=P&interest_type=C

For Simple Regular Interest bonds, click on the link for the series of your bond at
http://www.csb.gc.ca/fis/redemption-tables-s40/?type_select=1&bond_type=P&interest_type=R

(The value is generally the face or par value of the bond as the interest has already been paid.)

If All Else Fails How Can I Find Out the Value of my Canada Savings Premium Bond?

You can contact the Canada Savings Bond office at the phone numbers listed on their webpage at
http://www.csb.gc.ca/contact-us/#phone

You are a “Certified Bond Owner” in case you’re trying to decide which number to call.

You can also ask at most banks and large financial institutions to check the value of your bond. They will usually look it up as a courtesy for you if they have time.

Good luck!

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Do you like to check the cash value of your bonds yourself before you take them to the bank to redeem them? Have you ever actually had a bank employee make a mistake in paying you the cash value? Do you feel you have to give up on these bonds due to the current low interest rates paid? Please share your views and experiences with a comment.

My children have some Canada Premium Savings Bonds that were given to them when they were very young. Some of the bonds matured last month, so it’s past time to get the money out. Which left me with the question: how can my kids cash out their Canada Savings Bonds?

Who Pays Tax on the Interest Earned by CSBs, the Giver Or the Child?

I’d better clarify the income tax issues caused by the gift of bonds.

First of all, income tax has to be paid on the interest the bonds earn each year even if the income is not received until the bonds mature.

Second, if your children are given bonds by their

parents
grandparents
aunts
uncles
or other non-arms length relative

even if they do *not* live in the same household
then the person who gave the children the bonds has to pay the income tax each year on the interest earned the previous year.

What If the Child Didn’t Get a T5 for the Interest?

T5’s are issued only when the interest earned is more than $50 for a year.
That does *not* mean no tax is owed if there is no T5!

You can phone the Canada Savings Bond office at any time and ask what the interest earned the previous year was. You will need to know the name of the bond holder and their SIN, or they can help you with the calculation if you know the series number of the bonds and the face values. The CSB office can be reached at 1 800 575 5151.

Who Pays the Tax After the Bonds Have Matured?

If your child is 18 or older, they can start to declare the annual interest on their own income tax form in April. They will have to pay tax on the interest if they have a high income. Most teens don’t and will not have to pay any tax.

After the Bond Matures and Is Cashed Out Who Pays the Tax on Re-investing the Money?

It’s trickier if your child is still under 18 at the time the bond matures.

Any new interest earned by the principal (the face value of the bond) when it is re-invested must be declared on an income tax return by the person who gave the bond to the child.

But interest (or other income) can also be earned on the interest already paid on the bond. Any interest earned on the original interest is, in theory, taxed in the hands of the child. The minor would have to file an income tax report in April and report the interest (or other income). Because the minor likely has no or little other income, the child would not usually have to actually pay tax on that interest (or other income.)

How does one know which interest is which? Well, you’d better keep very careful, very accurate records, because the government can demand to see them. Like all tax records, you’d have to keep the information for about 7 years.

For simplicity, often the original giver or the parent just keeps reporting all of the income until the child turns 18.

I would like to get some clearer information on how this income attribution works before I change how we file our taxes.

How Can My Children Cash Their Canada Savings Bonds? Can The Bank Place a Hold on the Money?

In the meantime, we need to get the matured Premium bonds cashed as they are not earning anything anymore.

Before heading to the bank, I called the Canada Savings Bond office to clarify the rules.

I already knew from their website that if the child is too young to cash the bonds by signing, the parent, with proof of guardianship, can cash them on the child’s behalf. You’d need proof that the child is the person named on the bond and proof of your relationship to the child.

(This is one example of where a “bricks and mortar” bank can be handy: at our bank, they’ve seen our children banking with me for a very long time. The kids even get special treats on some holidays from the tellers. There’s much less suspicion when we try to prove our relationship after they’ve watched the same child for years interrupting and pulling on your sleeve saying “Mummy, mummy, mummy!”)

I phoned, though, to clarify whether the bank is allowed to put a hold on the money after the bond is cashed.

Somewhat to my surprise, yes, they are. Apparently there have been instances where people have reported a bond certificate as lost and cashed it, then found the bond certificate and tried to cash it again. So the bank is within its rights to require you to deposit the money from the matured bond and to place a hold on that money until the bond clears.

A Reminder to Parents to Teach Their Children Cursive

As we head off to the bank, I’d just like to remind parents that despite the new curriculum in many jurisdictions, it’s worth your child learning some cursive. Banks still expect a signature on monetary documents. The sooner your children can learn to make the same scrawl the same way for their name, the easier they will find banking.

At least until they start scanning our retinas.