There are a number of deductions, called Carrying Charges and Interest Expenses, available to taxpayers to claim on their personal income tax returns.
The Canada Revenue Agency states that if you incur costs during the course of earning income from your investments, you may claim those expenses as tax deductions. Eligible carrying charges for the purposes of earning investment income include the following:
- Management fees for your non-registered investments (excluding TFSAs and registered plans like RRSPs, RRIFs);
- Fees paid to investment advisors (other than commissions);
- Fees for recording investment income;
- Interest paid when borrowing money to earn taxable investment income (excluding capital gains); and
- Interest paid on a policy loan to earn taxable income.
However, carrying charges do not apply exclusively to investment income. Other eligible expenses that also qualify as carrying charges include:
- Legal fees paid for support payments that your current or former spouse or common-law partner will have to pay you. This includes the establishment of support payments, collection of late payments, and action to increase said payments; and
- Tax preparation fees where accounting is an established part of the operations. You must have income from a business or property and you must not claim the same deduction against the operation’s income.
A few notable items that are not deductible as carrying charges include safety deposit box fees, interest on student loans, brokerage trading charges, subscriptions to financial publications and legal fees for divorce, separation or custody arrangements.
There are many deductions and credits you can apply to help save on your taxes. If you would like to learn more about Carrying Charges and Interest Expenses, or other credits and deductions that can help you and your family, contact GB Pilley & Associates Ltd., Chartered Professional Accountants at 604 926 3522.