Investment Income Tax - claiming eligible expenses

Tax Return Checklist

Reporting investment income and claiming eligible expenses related to investment income. When claiming investment expenses these expenses must be related to only income from a business or property. Your business must produce either goods or services. There are three main categories of investment income: interest, dividends, and capital gains:

• Eligible and other than eligible dividends

• Interest on your bank account

• Interest on GIC

• Interest on CSBs

• Interest on disposition of a treasury bill

• Earnings on life insurance policies

• Foreign interest

• Capital gain (loss) when selling or transferring capital property (land, buildings, bonds, shares, funds, and trust units)

What is important to know

You are eligible to claim the following carrying charges and interest that you paid to earn income from investments:

• Fees paid to manage investments 1

• Fees paid for accounting services (filing an income tax return for your business)

• Interest paid on money you borrowed for investment purposes 2

• Interest paid during the year on a policy loan (T2210 form)

1 cannot claim the interest you paid for PRPP, RRIF, RRSP, SPP, and TFSA tax-free type of investments
2 If your investment can only produce capital gains you cannot claim the interest paid. If your investment in common shares and a corporation is not paying dividends, then interest on money borrowed to purchase these shares is not tax deductible.

Supporting Documents

Eligible Expenses

Investment Income

Investment income from registered slips:

T3 Mutual fund or Trust income
T5 Investment income (dividends, mutual funds, and interests)
T5008 Securities Transactions (Treasury bills)
T1135 Foreign income

Other sources of investment income:

Capital gains from the sale of assets/investments
Stock options
Interests received not from slips

Fees paid to manage eligible investments
Fees paid for accounting services
Interest paid on money borrowed for investment purposes
Interest paid on a policy loan

Line 22100 - Carrying charges and interest expenses

Property Sales or Transfer Documents
Bank statements
Statements from financial institutions
Statements and receipts to support claims