– You’re absolutely correct. Separating which investment-related fees (or,
as the Canada Revenue Agency calls them, “carrying charges”) are deductible
from which are not is complicated. And the CRA has a list to prove it.
Here’s CRA’s list of the deductible carrying charges and interest you paid
to earn income from investments:
You may deduct the fees you paid for management or administration of your
investments. However, you may not deduct the administration fees you paid
for your Registered Retirement Savings Plan (RRSP) or Registered Retirement
Income Fund (RRIF).
You may not deduct the fees charged to a mutual fund (the management
expense ratio). Because the MER is charged directly against the fund, it is
not reported on individual income tax slips and so cannot be claimed as an
investment management expense.
In addition, the CRA says you may not deduct brokerage fees or commissions
paid to buy and sell securities. Instead, you may be able to use these
costs when you calculate your capital gain or capital loss.
Investors who pay fees directly for separately managed accounts (SMAs) or
wrap accounts may deduct those fees as carrying charges on their tax
Also, if you were thinking of deducting safety deposit box fees as an
investment expense, forget it. That particular tax break was eliminated for
tax years after March 21, 2013.
You may also deduct fees paid for certain investment advice related to
buying or selling a specific investment, or for recording investment
income. However, you may not deduct subscription fees paid for financial
newspapers, magazines, or newsletters.
There’s a fine line between what constitutes advice related to selling
specific securities and what doesn’t. In its Interpretation Bulletin
IT-238, the CRA attempts to make the distinction: It says fees paid for
advice such as “general financial counselling or planning” are not
eligible, even though the principal business of the advisor or counsellor
You may deduct interest on money borrowed for investment purposes, which
means you’re using the borrowed money to try to earn investment income,
including interest and dividends. However, generally you may not deduct
interest if you use borrowed funds only for the purpose of generating a
In addition, you may not deduct interest paid on money borrowed to
contribute to an RRSP, a pooled RPP, a specified pension plan, a Registered
Education Savings Plan (RESP), a Registered Disability Savings Plan (RDSP),
or a Tax-Free Savings Account (TFSA).
There is, however, a complicated exception to this rule. If you had
previously borrowed money to invest in a non-registered account and then
transfer the investment to an RRSP after you’ve repaid the loan in full,
you may deduct the interest.
It’s pretty obvious that deducting investment expenses and carrying charges
is fraught with peril. If your situation is complicated and there are large
amounts involved, it would be best to consult your financial advisor before
making any claims on your tax return. – Robyn
Robyn Thompson, CFP, CIM, FCSI, is the founder of
Castlemark Wealth Management, a boutique financial advisory firm specializing in wealth management
for high net worth individuals and families. Contact her directly by
phone at 416-828-7159, or by email at
for a confidential planning consultation.
Notes and Disclaimer
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The foregoing is for general information purposes only and is the opinion
of the writer. Securities mentioned are illustrative only and carry risk of
loss. No guarantee of investment performance is made or implied. It is not
intended to provide specific personalized advice including, without
limitation, investment, financial, legal, accounting or tax advice. Please
contact the author to discuss your particular circumstances.