Looking Beyond GIC’s

With interest rates shifting, many farms are re‑thinking where they hold cash and how they generate income beyond traditional GICs. If your GIC is coming due this year, you’ve probably noticed you’re not getting the same rate you were before.

For a lot of farms, there’s always some level of cash sitting on the sidelines. Maybe it’s money for inputs, maybe it’s there in case land comes up for sale, or maybe it’s just short‑term working capital. Traditionally, that’s been parked in GICs or savings accounts. But as rates move, many farms are starting to look at alternatives—things like high‑interest ETFs, short‑term bond funds, or laddered strategies that give you flexibility while still earning a return.

The key difference compared to a GIC is this: you’re often trading guarantee for flexibility and liquidity. Some of these alternatives allow you to access your money quickly, rather than locking it in for a fixed term. But with that comes the need to understand risk, and just as importantly—how the income from those investments is taxed. Because whether it’s interest, dividends, or capital gains, the type of return matters. And that’s where planning goes beyond just “what pays the highest rate” and into “what actually works best for your situation.”

If you have cash coming due in GICs this year, it may be worth reviewing your options before simply renewing.

When was the last time your advisor did a review to see if your investments are in the most tax efficient account? It’s not just what you invest in, it’s where you invest that determines how much tax you pay. In Canada, the same investment can be taxed very differently depending on the account it’s held in.

For example, RRSPs give you a tax deduction up front, and the investments grow tax‑deferred—but withdrawals are taxed as income later.

A TFSA, on the other hand, doesn’t give you a deduction going in—but the growth and withdrawals are completely tax‑free.

Then there are non‑registered accounts, where interest income is fully taxable each year, dividends have their own tax treatment, and capital gains are typically only taxed when realized.

So when you’re comparing something like a GIC to a stock, the headline rate is only part of the picture. If that interest is fully taxed every year in a non‑registered account, the after‑tax return may look very different.

That’s why tax‑efficient planning often focuses on matching the right type of investment to the right account. For example, placing fully taxable income in sheltered accounts where possible, and using non‑registered accounts more strategically.

When everything works together, the goal isn’t just higher returns, it’s keeping more of what you earn. Would you like a review of your investments and which account they are held in to optimize your tax efficiency?

Connect with us to learn more about our approach.