When you earn investment income, you may be able to deduct certain expenses and carrying costs directly against that income. Not all investment-related expenses are deductible, but those that qualify can meaningfully reduce your tax bill. The most common deductible carrying costs include interest on money borrowed to buy investments, investment counsel fees, accounting fees to track investments, and custodial or safety deposit box fees. You cannot deduct personal advisor fees, investment losses (those use capital loss carryforwards instead), or the cost of purchasing investments themselves. The Canada Revenue Agency (CRA) allows you to claim expenses that are directly tied to earning investment income. These include: Interest on borrowed money - If you borrowed funds to purchase eligible investments like stocks or bonds, the interest is deductible. This applies to margin accounts, investment loans, and even some home equity lines of credit used for investing. Investment counsel and advisory fees - Fees paid to a financial advisor or investment manager for professional advice are deductible, as long as they're for managing your investments. Accounting and legal fees - Costs to prepare investment income statements, track capital gains, or handle investment-related legal matters qualify.
Yes, fees charged by robo-advisors for managing your investments are generally deductible as investment counsel fees. Keep the statements or invoices showing the fees charged.
Interest on a margin account is deductible as long as the borrowed money is used to purchase eligible investments that can generate income. If you use margin to buy investments that never generate income, the interest is still deductible because the investment has income-generating potential.
No, investment losses cannot be deducted directly. Instead, you use capital loss carryforwards to offset capital gains from other years or future years. However, investment expenses and carrying costs are claimed separately and may reduce your overall investment income.
Fees charged within your RRSP are generally not deductible because the income in an RRSP is already tax-sheltered. However, some fees paid outside the RRSP (like investment counsel fees) may be deductible if they relate to your overall investment management.
You should still report the expenses on your return even if you have no investment income or a net investment loss. Some provinces allow these expenses to carry forward to future years, and reporting them helps establish your tax position with the CRA.