Investors scouting for an often overlooked tax deduction should scan their T4 slips carefully. If there is a notation at the bottom of the slip that refers to Box 36-Interest Free or Low Interest Loan, it's possible that you will qualify for a deduction under Carrying Charges, Line 221 of the tax return.
Carrying charges are expenses incurred to earn investment income and can include:
To the latter point, an employer may provide an interest free or low-interest loan to employees who want to invest in the employer's company or use the money for investment purposes elsewhere in the markets.
If you took advantage of such an opportunity, your employer would have added to your employment income in Box 14 of the T4 slip, a taxable benefit representing the difference between the no-interest or low interest loan and the prescribed rate of interest set by CRA (Canada Revenue Agency). That difference can be claimed on Schedule 4 of your tax return, resulting in a deduction on Line 221. However note that interest is not deductible when investments were made to a registered account or a TFSA.
If you have forgotten this in the past, there is more good news. You can go back and recover missed carrying charges by filing an adjustment to prior returns; all the way back to tax year 2000.
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