# Is Balance transfer fee a interest expense



## jmalias (Aug 10, 2010)

Is Balance transfer fee a interest expense

Line 221 - most interest you pay on money you borrow for investment purposes

would you consider the $200 balance transfer fee an interest expense, against the $600 income from that loan


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## HaroldCrump (Jun 10, 2009)

Hint: it's a _fee_ not an _interest_


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## ghostryder (Apr 5, 2009)

HaroldCrump said:


> Hint: it's a _fee_ not an _interest_



Hint: Line 221 is not limited to interest.


I see no reason that paying a fee to move your investment loan to a lower interest rate would not be a reasonable carrying charge.


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## OhGreatGuru (May 24, 2009)

ghostryder said:


> Hint: Line 221 is not limited to interest.
> 
> 
> I see no reason that paying a fee to move your investment loan to a lower interest rate would not be a reasonable carrying charge.


Except it is not listed as one of the permissible types of carrying charges by CRA http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/221/menu-eng.html


I thought a "Balance Transfer Fee' was a fee charged for transferring a debt from one creditor to another (such as betweeen credit cards). How does this relate to the loan taken for investment purposes?


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## ghostryder (Apr 5, 2009)

OhGreatGuru said:


> Except it is not listed as one of the permissible types of carrying charges by CRA http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/221/menu-eng.html


It's also not excluded either. For $200???

One word. 

Materiality.


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## jmalias (Aug 10, 2010)

OhGreatGuru said:


> Except it is not listed as one of the permissible types of carrying charges by CRA http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/221/menu-eng.html
> 
> 
> I thought a "Balance Transfer Fee' was a fee charged for transferring a debt from one creditor to another (such as betweeen credit cards). How does this relate to the loan taken for investment purposes?


I got a 0% credit card, they transferred funds straight into TD account, transfer fee was charged, 100% of the funds went into investments.


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## cardhu (May 26, 2009)

toolbox said:


> Except it is not listed as one of the permissible types of carrying charges by CRA


I am reminded of a scene in that old show “Jag” ... the young lawyer-to-be, Bud, made a comment about some soldier’s actions being illegal, which prompted his more experienced mentor, Rabb, to ask ... _“Illegal? That’s not illegal. Why would you say it is?”_ ... to which young Bud replied ... _“Well, there’s no statute specifically permitting that action, therefore, it must be prohibited.”_ 

Jmalias’ fee is most certainly not interest, but it may very well be a legit carrying charge.


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## OhGreatGuru (May 24, 2009)

cardhu said:


> I am reminded of a scene in that old show “Jag” ... the young lawyer-to-be, Bud, made a comment about some soldier’s actions being illegal, which prompted his more experienced mentor, Rabb, to ask ... _“Illegal? That’s not illegal. Why would you say it is?”_ ... to which young Bud replied ... _“Well, there’s no statute specifically permitting that action, therefore, it must be prohibited.”_
> 
> Jmalias’ fee is most certainly not interest, but it may very well be a legit carrying charge.


Except the CRA bulletin does not say "You can claim carrying charges and interest you paid to earn income from investments *such as* (or *including*) the following: ,,,

It says: "You can claim *the following* carrying charges and interest you paid to earn income from investments:..." The phrase "the following carrying charges" limits it to a prescribed list.

Of course, if the actual act or regulation is worded differently than the bulletin, then the bulletin is in error.


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## billiam (Aug 24, 2009)

Perhaps IT-341R4 comes into play.


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## ghostryder (Apr 5, 2009)

billiam said:


> Perhaps IT-341R4 comes into play.



It would appear that it might:




> 2. Paragraph 20(1)(e) provides that a taxpayer can deduct an amount (other than an “excluded amount”) for certain expenses that are incurred in the course of:
> 
> (e) rescheduling or restructuring a debt obligation of the taxpayer...



I would contend that paying a fee to get a lower interest rate for your investment loan could be construed as "restructuring a debt".


And as I said before, for $200? Materiality.


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