Deductible Interest Tracker

Investment Purchase

Use this event when you purchase stocks or ETFs in your brokerage account.

When to Use

Record this event whenever you buy securities in your brokerage, whether you're using borrowed cash, personal cash, or a combination of both. This is how borrowed funds become "invested"—the key transition that makes interest deductible.

What You Enter

Date — The settlement date of the trade. This is typically one or two business days after you place the order (T+1 or T+2 settlement).

Symbol — The ticker symbol of the security you purchased (e.g., XAW.TO, VFV.TO, XEQT.TO).

Units — The number of shares you purchased.

Price per unit or Total amount — You can enter either the price per share or the total purchase amount.

  • If you enter price per unit, total purchase is calculated from units and price.
  • If you enter total amount, that value is used as the trade subtotal.

Fee (optional) — Trading commission, if any. If you entered a total amount that already includes fees, leave this blank or set to zero.

Borrowed cash — How much of the purchase is funded by borrowed cash.

Personal cash — Derived automatically as: total purchase - borrowed cash

The purchase total is fixed by your trade inputs (units/price/fee or total/fee). You choose only the borrowed portion; personal portion updates automatically.

What Happens

When you record a security purchase, several balances change simultaneously:

Credit Account

The borrowed portion of your purchase transitions from "uninvested" to "invested":

  • Invested Principal increases by the borrowed amount
  • Uninvested Principal decreases by the borrowed amount

This is the crucial transition. Once borrowed money is invested in securities, interest on that portion becomes clearly deductible.

Brokerage Account

Your cash decreases by the purchase amount:

  • Borrowed Cash decreases by the borrowed portion
  • Personal Cash decreases by the personal portion
  • Total Brokerage Cash decreases by the total amount

Holdings

A new holding is created (or an existing one is updated):

  • Units Held increases by the number of shares purchased
  • Total Cost Base increases by the purchase amount (including fees)
  • Borrowed Cost Base increases by the borrowed portion
  • Personal Cost Base increases by the personal portion

The cost base split is important. When you later sell the security or receive return of capital, the app uses this split to correctly allocate proceeds between borrowed and personal funds.

Example

You have $3,000 in borrowed cash and $1,000 in personal cash (dividends from previous holdings). You want to buy $3,500 worth of an ETF.

Event: Investment Purchase

  • Date: February 20
  • Symbol: XEQT
  • Units: 125
  • Price per unit: $28.00
  • Total: $3,500
  • Borrowed cash: $3,000
  • Personal cash: $500 (derived)

Before:

  • Uninvested Principal: $3,000
  • Invested Principal: $12,000
  • Borrowed Cash: $3,000
  • Personal Cash: $1,000

After:

  • Uninvested Principal: $0
  • Invested Principal: $15,000
  • Borrowed Cash: $0
  • Personal Cash: $500

New XEQT Holding:

  • Units: 125
  • Total Cost Base: $3,500
  • Borrowed Cost Base: $3,000 (85.7%)
  • Personal Cost Base: $500 (14.3%)

Now $15,000 of your debt is invested principal, up from $12,000. Interest on that additional $3,000 is now clearly deductible.

Choosing the Borrowed Amount

The borrowed cash field gives you control over which cash funds your purchase. This implements the CRA's "flexible approach to tracing" described in Folio S3-F6-C1.

You can set any borrowed amount that fits your available balances and the purchase total. The personal amount is calculated automatically.

Constraints: Borrowed cash cannot exceed either:

  • The total purchase amount, or
  • Your available borrowed cash

Similarly, the derived personal portion (total minus borrowed) cannot exceed your available personal cash.

Adding to an Existing Position

If you already hold shares of the same security, this purchase adds to your existing position. The app updates your holding:

  • Units increase by the new purchase quantity
  • Cost bases add together (both total and the borrowed/personal split)
  • The borrowed percentage of the combined position reflects the weighted average

For example, if you had 100 shares with a $2,000 cost base (80% borrowed), and you buy 50 more shares for $1,500 (60% borrowed), your combined position becomes:

  • 150 shares
  • $3,500 total cost base
  • $2,500 borrowed cost base (71.4%)
  • $1,000 personal cost base (28.6%)

Common Questions

What if I don't have enough cash? The app validates that you have sufficient cash before allowing the purchase. If you're short, you'll need to record a "Borrowing To Invest" event first to get more borrowed cash into your brokerage.

Should I include trading fees in the total? Yes. Fees are part of your cost base for tax purposes, and they should be included in the amount that determines how your purchase is funded.

Can I buy with 100% personal cash? Yes. Set borrowed cash to zero. The full purchase will be personal cash, and no borrowed funds move to invested principal.

What about buying on margin in my brokerage? This app tracks borrowing from your credit account (HELOC/LOC), not margin borrowing within your brokerage. If you use margin, that's a separate loan with its own interest that you'd need to track outside this app.

CRA Basis

Income Tax Folio S3-F6-C1, paragraph 1.42, allows a "flexible approach to tracing" when borrowed money is commingled with other funds. The CRA permits taxpayers to "choose the uses of the borrowed money from all of the uses of the money."

This means when your brokerage holds both borrowed and personal cash, you can designate which cash funds each purchase. The app implements this by letting you specify borrowed cash for each purchase.

Related Events

Borrowing To Invest — Get borrowed cash into your brokerage before purchasing.

Investment Sale — When you later sell shares from this holding.

Investment Distribution — When this holding pays dividends or distributions.