231 – Carrying charges and interest expenses

Note

You may not be able to deduct the carrying charges shown on your investment statements or in your financial institution's annual report. For more information, see Can You Deduct Carrying Charges?

If you are deducting carrying charges and interest expenses incurred to earn investment income, you may be required to adjust your investment expenses. See the instructions for line 260 and complete Schedule N.

Carrying charges

The expenses you can deduct include:

  • investment management or administration fees, such as fees you paid with respect to shares included in a Stock Savings Plan II (SSP II), except fees paid with respect to a registered retirement savings plan (RRSP), a pooled registered pension plan (PRPP) (including a voluntary retirement savings plan [VRSP]), a registered retirement income fund (RRIF) or a tax-free savings account (TFSA);
  • amounts paid for the safekeeping of your shares and securities;
  • fees, other than commissions, paid to certain investment counsellors, except fees paid with respect to an RRSP, a PRPP/VRSP, a RRIF or a TFSA; and
  • the amount shown in box L-4 of your RL-1 slip.

Interest expenses

You can deduct the interest paid on loans you took out in order to earn investment income if the loans were used to acquire, for example:

  • bonds, including interest paid through payroll deductions to acquire them;
  • shares, including shares included in an SSP II, up to the time the shares were transferred to an RRSP or a TFSA;
  • preferred shares in a cooperative authorized to issue securities that qualify for the Cooperative Investment Plan (CIP), up to the time the shares were transferred to an RRSP or a TFSA;
  • an interest in a partnership of which you were a specified member; or
  • mutual fund units, up to the time the units were transferred to an RRSP or a TFSA.

Subject to certain rules, you can also deduct all or part of the interest paid, after the disposition (sale, transfer, gift, bequest, etc.) of investments, on loans you took out in order to acquire the investments. To determine the deduction you can claim, contact us.

Life insurance policy loan

You can deduct the interest you paid on a loan taken out on a life insurance policy in order to acquire an investment from which you derived income. Have your insurer complete form TP-163.1-V, Interest Paid on a Loan Taken Out on a Life Insurance Policy. Enclose the form with your return.

Non-deductible expenses

The following expenses are not deductible:

  • the rental charge for a safety deposit box;
  • commissions paid to a broker on the acquisition or disposition of shares or mutual fund units (commissions paid on the acquisition of securities are included in the cost of the securities, whereas commissions paid on the disposition of securities must be reported as expenses in Schedule G);
  • interest paid on loans taken out in order to acquire contributions to a registered pension plan (RPP), a deferred profit-sharing plan (DPSP), a registered retirement savings plan (RRSP), a pooled registered pension plan (PRPP) (including a voluntary retirement savings plan [VRSP]), a registered education savings plan (RESP), a registered disability savings plan (RDSP) or a tax-free savings account (TFSA);
  • interest paid on loans taken out in order to acquire Capital régional et coopératif Desjardins shares, shares in the Fonds de solidarité des travailleurs du Québec (FTQ), or shares in Fondaction, le Fonds de développement de la Confédération des syndicats nationaux pour la coopération et l'emploi;
  • interest paid on loans taken out in order to acquire property that was transferred to an RPP, an RRSP, an RDSP or a TFSA (the interest is non-deductible as of the date of the transfer);
  • interest paid on loans taken out in order to repay amounts withdrawn from an RRSP under the Home Buyers' Plan (HBP) or the Lifelong Learning Plan (LLP);
  • management and administration fees, as well as fees paid to investment counsellors, if the fees were paid with respect to an RRSP, a PRPP/VRSP, a RRIF or a TFSA;
  • administration fees incurred for the acquisition of Capital régional et coopératif Desjardins shares, shares in the Fonds de solidarité des travailleurs du Québec (FTQ), or shares in Fondaction, le Fonds de développement de la Confédération des syndicats nationaux pour la coopération et l'emploi; and
  • the cost of acquiring specialized publications and journals.

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