Schedule N - Adjustment of Investment Expenses

The unused portion of the adjustment of investment expenses is equal to the total of the amounts indicated since 2004 on lines 40 and 64 of Schedule N, minus the amount already used to reduce your investment income for a previous year.

Under a measure that came into effect on March 31, 2004, the amount of investment expenses you deduct cannot be greater than your investment income. Complete ScheduleN to calculate, where applicable, the amount to be entered on line 260 of your return, if you are claiming one or more of the following deductions:

• a deduction for a loss from a partnership of which you were a specified member (included on line 29 of Schedule L or line 136 of your return);
• a deduction for carrying charges and interest expenses (line 231 of your return);
• a deduction for exploration or development expenses (line 241 of your return);
• a deduction for the following other expenses that you incurred to earn property income:
  • a repayment of interest received,
  • a deduction for certain films (line 250 of your return),
  • a deduction for foreign income tax on income from property other than rental property (line 250 of your return),
  • life insurance premiums deducted with respect to property income that is not rental income,
  • a deduction for the repayment of an advance on a life insurance policy (line 250 of your return).

In calculating the adjustment of investment expenses, do not take into account any amount of bad debt deducted in the calculation of property income.

On line 14 of Schedule N, enter the result of the following calculation:

• Add the amount claimed for renewable and conservation expenses incurred in Québec, the amount claimed for Québec development expenses, and the amount claimed for Québec exploration expenses that do not give entitlement to an additional deduction.
• Subtract the total from the amount on line 241 of your return.
• Multiply the result by 50%.

The deductible amount of renewable and conservation expenses incurred in Québec is shown in box 60-2 of your RL-15 slip or box A-1 of your RL-11 slip.

The deductible amount of Québec exploration expenses that do not give entitlement to an additional deduction is shown in box 60-1 of your RL-15 slip or box A-2 of your RL-11 slip.

Enter the amount from line 139 of your return, unless the amount includes a capital gain that entitles you to the capital gains deduction (line 292a).

If you are reporting a capital gain that entitles you to the capital gains deduction (line 292a), you can enter the total of the amounts shown on line 139 of your return and line 86 of Schedule G, provided you meet both of the following conditions:

• You disposed of the qualified property after March 18, 2007.
• You reached the $750,000 capital gains deduction limit before the current taxation year.

In all other cases, contact Revenu Québec.

If you are entering an amount on line 260 or 276 as an adjustment of investment expenses, you can use all or part of that amount to reduce your net investment income for the previous three years or for future years. To calculate your net investment income for a year, use Schedule N. Complete lines 20 to 36 to determine your investment income, then subtract your investment expenses (lines 10 to 16, 50 and 52) from the amount on line 36. If you wish to reduce your net investment income for previous years, complete form TP-1012.B-V, Carry-Back of a Deduction or Tax Credit, and file it separately from your return.

Under a measure that came into effect on March 31, 2004, the amount that you deduct for investment expenses cannot be greater than your investment income. Complete Schedule N to calculate, where applicable, the amount to enter on line 276 of your return if you are claiming a deduction for

• a limited partnership loss (included on line 289 of your return);
• net capital losses from other years. Enter on line 52 of Schedule N the amount from line 290 of your return, unless you are deducting a net capital loss from capital gains qualifying for the capital gains deduction. In that case, contact Revenu Québec.

If you are entering an amount on line 260 or line 276 as an adjustment of investment expenses, you can use all or part of that amount to reduce your net investment income for the previous three years or for future years. To calculate your net investment income for a year, use Schedule N. Complete lines 20 to 36 to determine your investment income, then subtract your investment expenses (lines 10 to 16, 50 and 52) from the amount on line 36. If you wish to reduce your net investment income from previous years, complete form TP-1012.B-V, Carry-Back of a Deduction or Tax Credit, and file it separately from your return.

If you entered “0” on line 275 because you obtained a negative result, contact Revenu Québec to find out what rules apply to this situation.

The adjustment of investment expenses for the year of death must be entered in the principal return.

You may carry back the adjustment of investment expenses calculated for the year of death using method A or B below.

Method A

The adjustment of investment expenses calculated for the year of death can be used to reduce the investment income reported in the three years preceding the year of death. The adjustment may be carried back to one or more of the three years, provided the amount applied in a particular year does not exceed the net investment income reported for that year. If the full amount of the adjustment cannot be carried back, the excess amount may be claimed in the year of death, the previous year, or both of these years.

Method B

The adjustment of investment expenses calculated for the year of death may be claimed in the income tax return for the year of death or the previous year (or a portion of the adjustment may be claimed in each of these years).