Investment fees in Canada receive varied tax treatment depending on what you are paying for, and critically, which account the investments are in. Fees in a non-registered account may qualify for a deduction; the same fee in a registered account does not. This page covers the carrying charges and interest you can claim on line 22100, why MERs and registered-account fees don’t count, and the records to keep. It is one of the investment-related entries in our guide to Canadian tax deductions and credits.
The core rule: non-registered accounts only
Investment-related deductions are only available on non-registered (taxable) investment accounts. No deductions apply to:
- TFSA: tax-free account; fees paid here are not deductible
- RRSP / RRIF: fees inside the account are not deductible; fees paid separately are sometimes argued but generally not accepted
- RESP: not personally taxable while in the account
Category 1: Investment management fees (carrying charges)
Management fees paid outside an account (billed by your advisor directly) on a non-registered account that holds income-producing investments are deductible on:
Line 22100: Carrying Charges and Interest Expenses
When the fee qualifies:
- You received an invoice or statement showing the fee charged
- The fee is for managing investment assets in a non-registered account
- The account holds investments that produce or can reasonably produce income (dividends, interest)
When it does NOT qualify:
- The fee is paid inside a TFSA or RRSP (fee reduces the account value but is not deductible)
- The fee is for general financial planning, estate planning, budgeting, or insurance advice
- The fee relates to registered account management
MERs embedded in funds: not deductible
The Management Expense Ratio of a mutual fund or ETF is deducted from the fund’s assets before returns are reported. You never pay this directly; it is reflected in the NAV (net asset value). Because you made no payment, there is nothing to deduct. The MER is an invisible cost in the fund’s returns.
Category 2: Interest on money borrowed to invest
Interest paid on money borrowed to purchase taxable investments is deductible under Section 20(1)(c) of the Income Tax Act, subject to rules:
Qualifying conditions:
- The borrowed money is used to earn income, not for TFSA/RRSP contributions, and not for personal use
- The investment has a reasonable expectation of income (dividends, interest; capital gains alone may not qualify)
- You can trace the borrowed funds to the investment purchase
Common qualifying scenarios:
| Borrowing method | Investment | Deductible? |
|---|---|---|
| Margin account interest | Canadian dividend stocks | ✅ Yes |
| Investment loan (purpose loan) | Dividend-paying ETF portfolio | ✅ Yes |
| HELOC proceeds → non-registered account (Smith Manoeuvre) | Dividend/interest portfolio | ✅ Yes |
| Line of credit draw → RRSP contribution | n/a | ❌ No (RRSP) |
| Line of credit draw → TFSA | n/a | ❌ No (TFSA) |
| Personal loan for vacation, later separately invested | n/a | ❌ No (can’t trace) |
The HELOC row is the idea behind the Smith Manoeuvre: borrowing against your home to buy investments in a non-registered account, so the interest becomes deductible. How the strategy works, and its risks, are covered in the Smith Manoeuvre guide.
The tracing principle
The deductibility of interest follows the use of funds, not the source. If you borrow $50,000 and deposit it directly into a non-registered investment account, the interest qualifies. If you borrow $50,000 and mix it with personal funds before investing, you need to trace the amount used for investment purposes.
Category 3: Safety deposit box fees
Fees paid to rent a safety deposit box for storing investment-related documents, securities certificates, or related valuables are deductible on Line 22100.
Category 4: Fees for investment advice or newsletters
Fees paid for investment counsel, advice, or subscriptions that are directly related to managing a non-registered investment portfolio may be deductible. Examples:
- Annual investment advisory fee from a portfolio manager for non-registered account management
- Subscription to a licensed investment research service (if you actively manage your portfolio)
Not deductible:
- General personal finance books, courses, or newsletters
- Subscriptions not specifically tied to investment income management
- Accounting fees for your personal tax return (fees for investment-related tax advice within a return may be partially deductible)
Other subscriptions, from work software to news, follow different rules, set out in which subscriptions you can deduct.
Foreign tax paid on investments
Foreign withholding tax on foreign dividends in a non-registered account is not a carrying charge: you claim a foreign tax credit for it on Form T2209, which credits the foreign tax against your Canadian tax owing. The steps are in how to claim the foreign tax credit, and how foreign investment income is taxed in general is in foreign income tax in Canada.
How to claim on your tax return
All qualifying investment carrying charges and interest are claimed on Line 22100 of your T1 (Carrying Charges and Interest Expenses). Complete Schedule 4 (Statement of Investment Income) to detail the expenses.
Documentation to keep:
- Invoices from your advisor or portfolio manager showing fee amount and account number
- Margin account statements showing interest charged
- Loan or HELOC statements showing draws clearly used for investment purchases
- Keep for 6 years
Red flags CRA watches for
- Claiming management fees on an RRSP or TFSA account
- Deducting MERs (which are never directly paid)
- Claiming interest on borrowed money used for non-income securities (growth stocks paying no dividend): this area is litigated and CRA scrutinizes it
- Claiming general financial planning fees as investment expenses
Reducing the tax in the first place
Which investments to hold in which account affects how much of your return is taxed at all; asset location strategy explains the trade-offs. If you run an investment business, the guide to self-employed tax deductions covers business expenses.