Frequently Asked Questions
- How can I track the market indices?
- How are the returns taxed?
- Why is the return considered to be interest income and not a capital gain?
- What are the reasons for varying maximum returns?
- How are the Opening Levels calculated?
- How are the Closing Levels calculated?
- How is the return calculated?
- What happens if the Closing Level is lower than the Opening Level?
- Can Market Growth GICs and/or Security GIC Plus be sold prior to maturity?
- How can I track the market indices?
Changes to the market indices linked to our Market Growth GICs and Security GIC Plus can be easily monitored through a variety of sources such as:
- The financial section of most major newspapers or
- EasyLine telephone banking
- Your TD Canada Trust Branch.
- How are the returns taxed?
Return on a Market Growth GIC is not subject to tax when the GIC is held within registered account, as with conventional registered GICs.
If a Market Growth GIC is held as a non-registered investment, all such interest paid to the customer will be taxed as regular interest income in the year in which it is earned. A T5 is issued after maturity.
For the Security GIC Plus, you will receive an annual tax receipt reflecting the interest earned during each calendar year over the term of your investment based on the Guaranteed Minimum Interest Return. After maturity of the Term, you will receive a tax receipt reflecting the Total Interest Return, which will comprise the Guaranteed Minimum Interest Return for that year, and the Bonus Interest Return, if any.
- Why is the return considered to be interest income and not a capital gain?
You are not actually investing in shares listed on a stock market. The applicable market index is used to measure the return on your investment.
- What are the reasons for varying maximum returns?
The Maximum Return is typically set at a level below 100% due to our costs of managing the risks associated with protecting the principal of these products. Although the Maximum Return is set for the life of your specific investment, the Maximum Return is subject to change (affecting new purchases only).
- How are the Opening Levels calculated?
(Opening Levels (OL) -- previously referred to as Opening Index Level (OIL)
The Opening Level ("OL") is equal to the closing level of the applicable index two-business days after issue date. If the applicable exchange for a non-Canadian index is not open for trading on the second business day after issue date, the next succeeding day on which the non-Canadian exchange is open for trading will be used for the purpose of determining the OL of that particular index.
- How are the Closing Levels Calculated?
(Closing Levels (CL) -- previously referred to as Closing Index Level (CIL)
The CL is the closing level of the applicable index one business day prior to the maturity date. If the applicable exchange for a non-Canadian index is not open for trading on such day, the preceding day on which the non-Canadian exchange is open for trading will be used for the purpose of determining the CL of that particular index.
- How is the return calculated?
The return for a Market Growth GIC, if any, is calculated as 100% of the return of the underlying index up to the Maximum Return set for each product at the time of purchase. Return of the underlying index = (Closing Level - Opening Level) / Opening Level. For example, the Maximum Return for the 3-year Utilities GIC Plus is set at 15% (subject to change). You will receive the full market return up to 15%. If the return of the underlying index over the three years is 50%, you will receive 15%.
The Security GIC Plus uses a similar method of calculation, but with a minimum rate guarantee.
- What happens if the Closing Level is lower than the Opening Level?
Except for the Security GIC Plus, no interest is paid at maturity.
For the Security GIC Plus, the principal plus accrued interest at the guaranteed minimum rate will be paid at maturity.
- Can Market Growth GICs and/or Security GIC Plus be sold prior to maturity?
A Market Growth GIC cannot be redeemed or cashed in prior to maturity, except in the case of the death of the holder. In that case, for a Market Growth GIC, only the principal will be repaid. If you purchase a Market Growth GIC in your TD Canada Trust RIF or TD Canada Trust Education Savings Plan (RESP), payment from your RIF or TD Canada Trust RESP can be made from your Market Growth GIC if that is the only remaining property in your plan. Should a Market Growth GIC be used to fund a payment or withdrawal from your RIF or TD Canada Trust RESP, the portion redeemed will reduce the principal investment and no interest shall be payable on the redeemed amount.
For the Security GIC Plus, it cannot be redeemed or cashed in prior to maturity, except in the case of the death of the holder. In that case, the principal will be repaid together with accrued interest at the minimum guaranteed rate.
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