Is interest income from a bank account or GIC taxable in Ontario?

Yes — interest income is fully taxable as income in Canada and Ontario. Unlike dividends or capital gains, interest does not benefit from any preferential rate or credit. Every dollar of interest you earn is added to your income and taxed at your full marginal rate (federal plus Ontario provincial).

Interest must be reported in the year it is earned or credited to your account, even if you do not actually receive a payment that year. For example, compound-interest GICs accrue interest annually, and you must report the accrued interest on your T1 each year, not just when the GIC matures.

Your financial institution will issue a T5 slip showing interest paid or credited to you during the calendar year. If you receive interest from multiple sources — savings accounts, GICs, bonds, personal loans to others — each source should be reported. Interest earned inside a TFSA or RRSP is sheltered from annual tax, which is why holding interest-bearing investments inside registered accounts is a common strategy. If your interest income is substantial, a tax professional can help you decide which accounts to hold different asset types in.