A taxpayer has submitted this document.
At the bottom of the page, it reads:
TOTAL ELIGIBLE INTEREST FROM CANADIAN SOURCES (in the PAID BY YOU column) $X.XX (under $10)
I usually get a T5 slip with these.
Does this mean nothing needs to be entered into the return? The AFR did not import a T5 either.
you have to report it but there is no T5 for these small amounts.
This is interest “paid by you” which goes on the investment sch (old sch 4) as interest paid to earn income. It can be interest on the margin account or bond premiums when purchased etc. It offsets any interest “paid to you” which would be reported on the T5.
It’s an interest expense on money borrowed to earn investment income. It’s deductible on the Investment Schedule. Whenever I have clients with investments I always review the bottom of the Investment Summaries (not just the T5 slip) to see if there was some deductible interest. As @laurie says, could be a margin account. Sometimes the clients aren’t even aware that they paid it.
I don’t think it does! Both interest received and interest paid need to be entered separately.
I always enter the small amounts if I am made aware of them, even if under $50.
I entered the amount on the Investment Income and Carrying Charges (previously Schedule 4)
Please see below:
Also, I noticed a line Eligible income tax return/assistance fees
I checked his 2021 tax return and there was no investment income, however, he has two T5008’s for 2022 (he sold many investments almost 100 resulting in a capital loss).
Does this mean on the 2023 tax return we can claim some of the tax return fees he incurred for filing the 2022 tax year in 2023 pertaining to the investments?
"I checked his 2021 tax return and there was no investment income, however, he has two T5008’s for 2022 (he sold many investments almost 100 resulting in a capital loss).
Does this mean on the 2023 tax return we can claim some of the tax return fees he incurred for filing the 2022 tax year in 2023 pertaining to the investments?"
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The taxpayer can look at the general T1 guide for preparing a T1 income tax return.
(Federal Income Tax and Benefit Guide: 5000-g-22e.pdf)
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There, the information on preparing a T1 can be found, including line-by-line explanations and examples such as this Line 22100 (Carrying charges, interest expenses, and other expenses) - which this year can be found on page 18 of that guide.
For my clients that have investment income, I do deduct my prior year fees here. I usually charge them more too because it’s a lot more work and I’m often digging to find missing slips. Unbelievable how some T3s are STILL not in AFR.
I took a look at the guide:
Most interest you paid on money you borrowed for
investment purposes, but generally only if you use it to try
to earn investment income, such as interest and dividends
Note
If the only earnings your investment can produce are
capital gains, you cannot claim the interest you paid.
I did notice that these investments are Option contracts.
I see this results in capital gains/losses.
Does this mean the interest cannot be claimed?
Thank you
Take a look at the Interest Folio. In particular section 1.70 " Generally, the CRA considers interest costs in respect of funds borrowed to purchase common shares to be deductible on the basis that at the time the shares are acquired there is a reasonable expectation that the common shareholder will receive dividends."
