Personal Finance

Taxation of Balance Transfer Fee on Investment

  • Last Updated:
  • Mar 21st, 2019 7:16 pm
Jr. Member
Aug 29, 2012
170 posts
5 upvotes
Whitby

Taxation of Balance Transfer Fee on Investment

Here's the scenario:

- MBNA balance transfer is taken
- Balance transfer fee is paid on the amount of the balance transfer (interest rate on BT is 0%, BT fee is 2% of amount transferred)
- The entire balance transfer amount is used to invest in dividend paying stocks listed on the TSX

Would the balance transfer fee amount be used:

1. As an equivalent to interest expense and be used on the tax return as interest paid on an investment?
2. To increase the cost basis of the investment?
3. As neither and have no impact on the tax return?

I checked on the CRA website and this particular scenario isn't mentioned.

Please only reply if you are well versed on the topic. No speculative answers please.
1 reply
Deal Fanatic
User avatar
Jan 27, 2007
5116 posts
984 upvotes
T.
I would treat it as an increase in the ACB.

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