Bank Charges & Interest — Canada Tax Rules

Claim business bank fees, service charges, and interest on business loans as deductible financial expenses.

Claimable: Fully claimable · Tax authority: CRA (Canada Revenue Agency)

CRA (Canada Revenue Agency) Rules

• Monthly service charges and transaction fees on a dedicated business bank account are fully deductible.
• Interest paid on a business line of credit or business loan used to earn income is deductible.
• Credit card annual fees and transaction fees on a card used exclusively for business are deductible.
• Interest on personal loans or personal credit cards is not deductible — even if the borrowed funds were used for business (seek professional advice if this applies).
• GST/HST collected and held in trust before remittance is not your income — ensure your bookkeeping tracks this correctly.
• Currency exchange fees on business transactions are deductible as a financial expense.
• PayPal, Stripe, and Square payment processing fees are deductible as business transaction costs.

Limits

No dollar cap — bank charges and interest on business debt incurred to earn business income are 100% deductible. Personal banking fees are not deductible.

Worked Example

Tom has a dedicated business chequing account costing C$25/month (C$300/year) and a Stripe merchant account charging 2.9% on sales. His Stripe fees total C$540 for the year. Total deductible financial expenses: C$840 — claimed on T2125.

Record Keeping

• Keep monthly bank statements for your business account showing service charges
• Retain annual credit card statements showing fees paid for a business card
• Keep Stripe, Square, or PayPal payout summaries showing processing fees deducted
• Retain loan statements showing interest charged on any business loan or line of credit
• Keep currency exchange confirmation slips for significant international transactions

Frequently Asked Questions

Are business credit card fees deductible in Canada?

Yes — annual fees and transaction fees on a credit card used exclusively for business purchases are deductible business expenses. If you use a personal credit card for business purchases, only the proportional business-use fees are deductible, and you must track this carefully.

Can I deduct Stripe or PayPal fees as a self-employed Canadian?

Yes — merchant processing fees charged by Stripe, PayPal, Square, or other payment processors are deductible business expenses in the year they are charged. Check your monthly statements from the payment processor for the exact fee amounts.

Is interest on a business loan deductible in Canada?

Yes — interest paid on a loan, line of credit, or business overdraft where the borrowed funds are used to earn business income is deductible. Keep your loan statements showing the interest component. The principal repayment is not deductible — only the interest portion.