James is an average kind of guy. He’s worked hard and has made a point of making regular contributions to his RRSPs. Even with the volatility of the stock markets over the last 18 months, James has done fairly well with his RRSP investments.
Having maximized his RRSP and TFSA contributions, James has decided to begin investing outside of an RRSP and asked what expenses he’s allowed to deduct. Here are some thinks that James and I discussed:
Capital Gains Or Business Gains
For the average investor, trading of stocks is on account of capital . This is a fancy way of saying that gains and losses are typically capital gains and capital losses. James trades on the capital account and since most Canadian investors treat gains and losses as capital, I will focus on the capital account.
Commissions & Brokerage Fees
The commissions you paid to your broker to purchase your stocks are added to the cost of the investment. When you sell your stocks, the commission paid effectively reduces the proceeds of the sale. While you cannot deduct these commissions directly, the addition to cost and deduction from proceeds of sale will ultimately reduce the capital gain (or increase the capital loss) you claim.
By the way you can open a Questrade account today and get a $50 commission rebate. Use the offer code: taxresource
Investment Counsel Fees
If you have hired an investment planner to give you advice on which stocks would be best to buy or sell, you can deduct the cost of those services on your income tax return. Be carful here, as there is a distinction between a commission paid to the broker to execute your order and investment advice: If the advice results in a commission to the same person, it’s may not deductible.
Safe Deposit Box
If you use your safe deposit box to safe keep stock certificates or other investment documents, the cost of the box is deductible. If you only use the box to store your bank statements, it is not.
If you subscribe to investment newsletters, magazines on investing or other publications, you cannot deduct the cost of these from your income unless you decide to make an election to treat your gains and losses as business income.