The Canada Revenue Agency has an extensive list of interest carrying charges and interest expenses you can claim on your tax return. Charges to claim include legal fees for support payments, fees for preparing your income tax return and management fees for your investments.
Carrying Charges and Interest Expenses You Can Claim
Claim the following carrying charges and interest expenses paid to make investment income:
- Any fees paid for specific advice about your investments or for tracking your income from investments.
- Any fees paid for management of your investments, besides any administration fees paid for your registered retirement savings plan or registered retirement income fund.
- Any fees paid to a third party to complete your tax return, provided it meets the following requirements: You earned business or property income, accounting is part of the daily operation of your business or property, and you are not using the claimed amounts as a tax deduction against your business or property income.
- In most cases, the interest you paid when borrowing to invest, but only if it is for investment income; this includes dividends and income. However, if the investment income is considered capital gains, you cannot claim an interest expense deduction.
- Any policy loan interest you paid to make income in the fiscal year in question. To claim this amount, your financial institution has to fill out Form T2210 (Verification of Policy Loan Interest by the Insurer) before the deadline of your tax return.
- Any fees paid to your lawyer for support payments (child or spousal support) when you are the recipient of support payments.
Claim a deduction in the following circumstances:
- When you collect support payments that are past due.
- You came to an agreement on the support payment amount with your existing or former spouse or common-law partner.
- You came to an agreement on the support payment amount with your child’s natural parent when the court order requires an amount to be payable, and your child’s parent is not your existing or former spouse or common-law partner.
- You incurred legal costs to increase the amount in support payments.
Carrying Charges and Interest Expenses You Cannot Claim
Do not claim any of the following as carrying charges and interest expenses on your tax return:
- Your student loan interest. (Claim it on line 319 of Schedule 1 instead.)
- Any subscription fees you paid towards financial magazines, newsletters or newspapers.
- Any interest paid on money borrowed for contributions to your registered retirement savings plan, pension plan, registered education savings plan, registered disability savings plan or tax-free savings account.
- Any commission or brokerage fees paid from buying or selling securities. (Claim these expenses when determining capital gains and losses.)
- Any fees paid to your lawyer for a divorce or separation agreement or to obtain custody of your child.