Claim your investment fees on your tax return

March 8, 2019

         

How much does a physician really need to know about taxes, tax planning and income tax returns?

If you do your own taxes, you can take advantage of tax software that goes through the questions with you. If you have an accountant, he or she will likely capture all the tax deductions and tax credits that are available to you.

But no matter how you complete your return, you want to have at least an awareness of all the tax deductions and credits that you’re eligible for. After all, this is knowledge that helps you save money.

You can deduct investment fees

One tax deduction that is easily overlooked is called “carrying charges and interest expenses.”

Carrying charges are expenses you incur to earn investment income (in non-registered accounts). Examples of carrying charges include:

  • fees to manage or take care of your investments
  • fees for certain investment advice or for recording investment income
  • fees to have someone complete your return, 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

You cannot claim carrying fees for any registered accounts—in other words, for an RRSP, a registered retirement income fund, a registered pension plan, segregated funds or a tax-free savings account. Also, amounts paid for financial planning are, in general, not tax-deductible.  

Are you an MD Financial Management client with a non-registered account?

MD ExO® Direct

If you invest using this digital platform, the management fees are tax-deductible in a non-registered account. You can find these fees in the Account Activity section of your statements.  

MD PlusTM

The management and administration fee is tax-deductible when incurred in a non-registered account. Clients holding 100% of their MD assets in an MD Plus account will have access to financial planning services free of charge.  You can find your total fee for the year on your December statement.

MD Private Investment Counsel

If you are an MDPIC client, you will get “Your 2018 Tax Reporting Package,” where you can find your management fees under “Statement of Fees Charged to Your Account”; once there, look for “Fees Incurred.” Remember that management fees are only tax-deductible when incurred in non-registered accounts.

How to report your carrying charges

In previous years, carrying charges and interest expenses were reported on Schedule 4 of the income tax forms, but the federal government has eliminated this form for the 2018 tax year. You can now report carrying charges and interest expenses on the Federal Worksheet in all provinces except Quebec. For Quebec, report your carrying charges on Schedule N.

Remember, you don’t need to know all the details of available tax deductions and credits—just enough to know what can benefit you. Talk to a tax professional to ensure you’re taking advantage of all the tax benefits available to you. 

Read the Tax Tips for Physicians and Physicians in Training

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