Schedule N: Adjustment of Investment Expenses

What’s in this article?

 

What is this?

Schedule N: Adjustment of Investment Expenses is used to calculate the deductions for the adjustment of investment expenses such as:

  • Partnership losses
  • Carrying charges and interest expenses
  • Exploration or development expenses
  • Other expenses that you incurred to earn income from property (other than rental property) such as:
    • a deduction for the repayment of interest received
    • a deduction for certain films
    • a deduction for foreign income tax on income from property other than rental property
    • a deduction for life insurance premiums relating to property income that is not rental income
    • a deduction for the repayment of an advance on a life insurance policy 

​You can use the all or part of the calculated adjustment of investment expenses to reduce your net investment income for the previous three years or for future years. To reduce your net investment income for previous years, you must complete form TP-1012.B-V: Carry-Back of a Deduction or Tax Credit. You can also calculate the unused portion of the amount of the adjustment of investment expenses that can be carried forward to a future year on  Schedule N.

 

Am I eligible?

If you have investment expenses and want to claim deductions for the adjustment of these investment expenses, you must complete Schedule N.

Note: In H&R Block’s Tax Software, the Schedule N has fewer fields to complete than the Schedule N on Revenu Québec’s website. This is because the software automatically takes into account amounts you have already entered on corresponding federal forms and/or information slips. These include:

  • Loss and income from a partnership of which you were a member;
  • Carrying charges and interest expenses;
  • Deduction for exploration and development expenses;
  • Dividends from taxable Canadian corporations;
  • Interest and other investment income
  • Income accrued under a life insurance policy;
  • Recovery of resource deductions;
  • Ordinary annuities; and
  • Taxable capital gains.

To complete the calculations for the deductions related to adjustment of investment expenses, enter amounts in the following fields on Schedule N:

  • Enter other expenses you had to earn property income (repayment of interest, life insurance premiums, etc.) – These are the total of expenses you paid to earn property income, including the following:
    • Repayment of interest received;
    • Foreign income tax paid on income from property other than rental property;
    • Life insurance premiums relating to property income that is not rental income;
    • Other expenses relating to certain films; and
    • Repayment of an advance on a life insurance policy;
  • Other property income allocated by a trust and property income allocated to shareholders
  • Enter the unused portion of the amount of the adjustment of investment expenses– This is equal to the total of the amounts entered since 2004 for your adjustment of investment expenses and adjustment of other investment expenses (line 40 and 64, respectively of Schedule N), minus the amount already used to reduce your investment income for a previous year.

Note: Do not take into account any amount for a bad debt deducted in the calculation of property income.

 

Where do I claim this?

Important: Before you begin, make sure you tell us that you lived in QUÉBEC on December 31st of the 2015 tax year, in H&R Block’s tax software. To do this:

  1. Click the HOME tab.
  2. Click the ABOUT YOU icon, and click the Your residence link. You will find yourself here:

Once you have confirmed your residence location, complete your Schedule N by following these steps:

  1. Click the PREPARE tab.
  2. Click the YOUR YEAR IN REVIEW icon. You will find yourself here:
  3. Click the checkbox labelled I had investments.
  4. Scroll to the bottom of the page and click Continue.
  5. Click the RRSPS AND INVESTMENTS icon. You will find yourself here:
  6. Under the INVESTMENT INCOME section, click the checkbox labelled Adjustment of investment expenses (Schedule N).

When you arrive at the page for Adjustment of investment expenses (Schedule N), enter your information into the tax software.

 

Where can I learn more?