# Credit Line Interest Deductability



## downloadduckss (Aug 5, 2011)

Hi

Knowing the interest expense for regular personal credit line are usually not deductible, I wanted to ask whether it is possible to deduct the interest expense from my taxable income when I utilize my personal credit line of credit for the purpose of paying my TUITION?

I work at a financial institution and the rate on my personal line of credit is lower than the rate for student line of credit offered by other financial institutions. 

Please let me know.

DD

PS - Pls do not recommend other sources for line of credit (at my current level of income, I cannot obtain student loans from the government)


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## balexis (Apr 4, 2009)

I never heard of such a thing, maybe others have?


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## FrugalTrader (Oct 13, 2008)

This might help:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/319-eng.html



> You cannot claim interest paid on any other kind of loan, such as:
> 
> a personal loan or a line of credit;
> a student loan that has been combined with another kind of loan; or
> a student loan received from another country.


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## OhGreatGuru (May 24, 2009)

Not as far as I am aware, and Frugal Trader's reply seems to be definitive. 

But you have pointed out an interesting anomally - if you had taken out a student loan under the Canada Student Loans Act, the Canada Student Financial Assistance Act, or similar provincial or territorial government laws for post-secondary education, the interest would be tax-deductible. But you because you borrowed it on a personal line of credit, it is not. Not clear on the rationale, but perhaps it would be too open to abuse if they did not restrict it to formal student loans.


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## downloadduckss (Aug 5, 2011)

OhGreatGuru said:


> Not as far as I am aware, and Frugal Trader's reply seems to be definitive.
> 
> But you have pointed out an interesting anomally - if you had taken out a student loan under the Canada Student Loans Act, the Canada Student Financial Assistance Act, or similar provincial or territorial government laws for post-secondary education, the interest would be tax-deductible. But you because you borrowed it on a personal line of credit, it is not. Not clear on the rationale, but perhaps it would be too open to abuse if they did not restrict it to formal student loans.


Unfortunately FrugalTrader is correct, I browsed some more and got the answer:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rvws/djstmnts-eng.html#student_loan

Thank you guys!


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## ghostryder (Apr 5, 2009)

OhGreatGuru said:


> But you have pointed out an interesting anomally - if you had taken out a student loan under the Canada Student Loans Act, the Canada Student Financial Assistance Act, or similar provincial or territorial government laws for post-secondary education, the interest would be tax-deductible. But you because you borrowed it on a personal line of credit, it is not. Not clear on the rationale, but perhaps it would be too open to abuse if they did not restrict it to formal student loans.



SL interest is NOT TAX DEDUCTABLE if used for education. It generates a non-refundable tax credit. You only get this credit if you paid interest to gov't student loans.


Whether interest is deductable as an interest expense (line 221) or not depends on what the borrowed funds are used for. If you use the funds to invest, then it's deductable.

If you get a Fed/Prov student loan and invest the money you can deduct the interest (line 221).


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