Investment fees on your tax return can be deducted

When preparing your taxes, a deduction that is often overlooked is carrying charges and interest expenses. These charges are costs you incur to earn income from an investment, but only expenses for non-registered accounts will qualify.

You can report carrying charges and interest expenses on the Federal Worksheet in all provinces except Quebec.

What fees are deductible?

Carrying charges include fees to manage your investments, costs for certain investment advice or for detailing investment income.  Tax preparation fees are also allowed if claiming income in T5 or T3 investment income. It is important to note that only the amount over and above the cost of preparing a normal return can be claimed. 

Are RRSP management fees tax deductible?

No. This includes registered accounts such as RRSPs, RRIFs - registered retirement income funds, RPP’s - registered pension plans, segregated funds, or TFSAs - tax-free savings accounts

Are financial planning fees tax deductible?

Generally, no. This would include fees like those paid to an advice-only financial planner (one who doesn’t deal with your specific investments). If you have costs associated with a fee-based investment account that includes financial planning, these costs are generally tax deductible.

What about mutual fund management fees or stock purchases?

Yes, mutual fund management fees are tax deductible, but again, only in non-registered accounts. Trading fees or commissions to buy stocks and other investments are not tax deductible. It is important to note that mutual fund management fees are not the same as MERs - management expense ratios, which are not tax deductible.

Are fees to complete my income tax return tax deductible?

If you pay your accountant or tax preparer to complete your tax return, their fees are tax deductible, but only if all of the following apply:

• you have income from a business or property
• accounting is a usual part of the operations of your business or property
• you did not use the amounts claimed to reduce the business or property income you reported

If you need assistance in working through the complexities of tax deductions, reach out to our office for assistance. Do not hesitate to contact us on any matter involving the smooth operation of your business or personal tax situation.