- Financial Institutions and Investment Dealers
- Quick facts about Canada Savings Bonds
- An estimated $9 billion of Canada Savings Bonds (CSBs) and Canada Premium Bonds (CPBs) will be held by investors by March 31, 2012
- Almost 3 million Canadians own a Canada Savings Bonds product
- Over 95% of CSBs sold are through the Payroll Savings Program
- 10,500 employers across Canada participate in the Payroll Savings Program
- Close to 1 million Canadians participate in the Payroll Savings Program
- What changes are being made to the Canada Savings Bonds Program?
Beginning with the fall 2012 campaign, the Canada Savings Bonds Program will offer one product per sales channel, Canada Premium Bonds will be enhanced with a new cashability feature and the term to maturity of all new Canada Premium Bonds and Canada Savings Bonds will be shortened to three years from ten years.
- Why make changes to the Canada Savings Bonds Program?
Changes will be made to the Canada Savings Bonds Program to improve the efficiency of the program and better align product offerings with the needs of today’s investors.
In an environment of increasing competition and low interest rates, the CPB has been enhanced with a new cashability feature in order to offer a more flexible product.
Over 95% of CSBs are sold through the Payroll Savings Program. Canadians value the ease of saving for their short-term goals in a way that is convenient and free of charge. Offering the CSB exclusively in the Payroll Savings Program responds to the way Canadians are using the Canada Savings Bonds Program.
- How does the new cashability feature for CPBs work?
The new cashability feature of a CPB will allow Canadians to redeem their CPB bonds anytime during the year without penalty. Beginning August 1, 2012 all outstanding and future CPB issues will become cashable at anytime with interest earned up to the last anniversary date of issue. This will allow Canadians to earn the higher interest rate offered by the CPB while also having access to their funds when they need them.
- Are there any changes to my existing CPBs?
As of August 1, 2012, CPBs will become cashable anytime the bondholder chooses; however, interest will only be paid up to the last anniversary date of issue. All previously sold and still-outstanding CPBs will also benefit from this new feature. In addition, all new bonds sold will have a term to maturity of three years, shorter than the previous 10-year-term.
- What does a shorter bond term (10 to three years) mean for me?
As of October 2012, all new CSBs and CPBs sold will have a three-year term to maturity. The shorter bond term, which is more in line with other comparable retail bank products, means that your bond will mature after three years instead of 10 years.
- Will there be a change in the maturity date of bonds that I currently hold?
No. Your bonds will mature on the date specified or on the revised date if your bond series has been extended. You can find out if your bond has matured or remains outstanding by going to csb.gc.ca/home and clicking on ‘redemption value tables’ on the left-hand side.
- Will there be any changes to my CSBs purchased before October 1, 2012 through financial institutions and investment dealers?
No. All outstanding CSBs will retain all accrued interest and product characteristics (e.g. cashable anytime) up to their maturity date as per the Terms and Conditions associated with the particular bond at the time of sale. Outstanding CSBs will continue to be repriced annually and earn interest up until their maturity. CSB interest rate information will continue to be available online at csb.gc.ca.
- Will CSBs and CPBs continue to be priced separately?
Yes. CSBs and CPBs will continue to be priced separately. You can find interest rate information online at csb.gc.ca.
- When I have a CSB that matures, will I be able to reinvest in a new CSB?
CSBs will no longer be available for sale through financial institutions, investment dealers or the CSB Customer Service Office as of October 2012. However, if your CSBs mature on the first of November or December, you will have the option of purchasing the new CPB issue for those months.
- Do I have to redeem my CSB immediately since CSBs will no longer be sold by financial institutions or investment dealers?
No, you do not have to redeem your CSBs immediately and they will continue to earn interest until they mature. You can still redeem your bonds at your convenience regardless of the changes to the Canada Savings Bonds Program.
- I contribute to the Payroll Savings Program. Will these changes affect me?
The shorter CSB bond term does not affect your Payroll Plan. Since maturing bonds are automatically rolled over into the next available series along with the accrued interest, the new term to maturity will simply see the bonds maturing sooner and reinvested more frequently into the next available CSB series until the bonds are cashed.
- I am a Campaign Director for the Payroll Savings Program where I work. (How) Will these changes affect me?
The changes to the Payroll Savings Program will not change the administration of the Program or how a Campaign Director runs a campaign. The Program still offers employees a simple easy way to save with no associated fees.
- Why are certificated bonds no longer available through the CSB Online Services website?
Purchasing certificated bonds through the web was not strongly utilized by the public. Thus in order to maintain a cost-effective CSB Program for Canadians, the web option is being removed. However, Canadians will still be able to purchase a certificated CPB either through a financial institution, or by calling the CSB Customer Service Office. CPBs are also available from investment dealers in non-certificated form.
- Why is the campaign being reduced from six months to two months?
The six-month campaign began as a pilot project in 1998 so that Canadians could buy Canada Savings Bonds from financial institutions and dealers for six months out of the year (early October to April 1st). However, typically about 95% of the sales are still occurring in the period from early October to December. In order to continue providing a more sustainable, streamlined, and efficient program, we are focusing our efforts on our traditional fall campaign period. This will help to control costs while ensuring that the CSB Program continues to offer products and services that meet the needs and demands of Canadians.
- Why are you not allowing new customers to open Government sponsored Canada RSP/Canada RIF accounts as of October 2010?
Canada Savings Bonds and Canada Premium Bonds held in the Government sponsored Canada RSP/RIF involve relatively high costs for the Canada Savings Bonds Program. Low participation rates suggest there is low demand among Canadians for the Government sponsored Canada RSP/RIF. This change will help ensure the long term sustainability of the Program while still meeting the needs expressed by Canadians. Canadians will still be able to hold Canada Savings Bonds and Canada Premium Bonds in their self-directed RRSPs/RRIFs.
- Will I still be able to contribute to my existing Canada RSP account?
Yes. Rules around the contributions and transfers to existing plans have not changed. Canadians currently holding a Canada RSP account will still be able to:
- Transfer cash into their existing accounts.
- Transfer CSBs and CPBs from other registered plans into their existing accounts.
- Transfer CSBs and CPBs held outside of a registered plan into their existing accounts.
- What will happen to my RSP account? What will happen to the savings in my RSP account?
Existing registered CSB or CPB holdings will remain in your Canada RSP account. Rules for redemptions and withdrawals from your Canada RSP account have not changed. Rules regarding investments and bond maturities have also not changed.
- My Canada RSP is set to become a RIF this year. Now what will happen?
Canada RSP participants will still be able to roll their savings into the Canada RIF. The Canada RSP automatically matures at age 71 and if no new instructions are given by the plan holder, then the plan automatically converts to the Canada RIF if the value exceeds $500. If under $500 then the balance is paid out.
- Can I redeem or transfer my holdings out of my Canada RSP account?
Yes. Rules for redemptions and transfers to existing accounts have not changed.
- Will I still be able to transfer in holdings to my Canada RIF account?
Rules regarding the transfer-in and investments have not changed. You will continue to be able to make the following transactions to your existing RIF Account:
- Transfer-in CSBs and CPBs held in a self-directed RRSP/RRIF
- Transfer-in CSBs and CPBs held in the Canada RSP
- Transfer-in cash held in other registered plans (RRSP/RRIF)
- Transfer assets between CSBs and CPBs (series) held within the plan.
- Will I still be able to transfer my holdings out of my Canada RIF account?
Yes, rules for withdrawals from your RIF including payments, transfer outs, and lump sum payments have not changed.
- The Government of Canada has been extending bonds for many years. Why have they now decided to mature CSBs / CPBs?
The government decided, on a temporary basis, to automatically extend the terms of maturing CSB and CPB series (for another 10 years) in order to prevent a sharp decline in the amount of retail debt stock (i.e. CSBs and CPBs). Now that this period of large CSB and CPB maturities has passed, the standard policy of allowing CSB and CPB series to mature (as per the terms and conditions of your bond) has been re-adopted.
- How can I obtain a Social Insurance Number (SIN)?
Individuals who do not have a SIN may obtain one by contacting their local Service Canada office.
- Why and when should I provide my Social Insurance Number?
Income tax legislation requires that registered owners provide their Social Insurance Number (SIN) for any investments generating interest and that financial institutions make a reasonable effort to obtain it. This requirement stems from the need for the SIN to be recorded on the individual’s tax information slips and forms (T5), and for this information to be sent to the Canada Revenue Agency.
- Can bonds be transferred?
Transfers are permitted in a limited number of cases. For example, with the death of a bond owner, following a legal name change or after a change of name due to divorce, marriage, or adoption. In these cases, appropriate documentation must be provided.
For more information, please call Customer Service. Transfers to RRSPs and RRIFs are also permitted for existing holders only.
Contact Payroll Customer Service for a CSB purchased through the Payroll Savings Program (please refer to the appropriate terms and conditions).
- Each year, do I have to declare the interest on my Regular-Interest “R” and Compound-Interest “C” Bonds for taxation purposes?
Yes. All “R” bond owners and, since 1990, owners of “C” Bonds (Series 45 and up) must declare annually the interest earned during the year.
Please note that the Canada Revenue Agency does not require us to issue T5s for amounts less than $50. For information concerning the reporting of Canada Savings Bond Investment Income (Line 121 of your tax return), contact the Canada Revenue Agency.