AI agents for business finance: what they can and can't do
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The short answer
It can be. CRA lets you deduct most interest on money borrowed to earn investment income such as interest or dividends, and its line 22100 guidance does not exclude foreign investments, so borrowing to buy dividend-paying NGX shares or Nigerian T-bills can qualify. Interest is not deductible where the only possible return is a capital gain, such as land held for its value, or where the money goes to personal use like a family house or an interest-free loan to a relative.
Some Canada-based Nigerians borrow, through a line of credit, a HELOC or an investment loan, to put money into Nigerian assets that appear to pay much more than Canadian ones. Whether the interest on that borrowing reduces your Canadian tax depends on what the borrowed money is used for, not where the investment is.
The rule
CRA's line 22100 page (modified 20 January 2026) says you can claim most interest on money borrowed to earn investment income, such as interest and dividends. It adds a sentence that matters for many Nigerian investments: if the only earnings your investment can produce are capital gains, you cannot claim the interest you paid. Interest on money borrowed to contribute to an RRSP, TFSA, FHSA, RESP or RDSP is not deductible either.
The page does not exclude foreign investments; where you have carrying charges for both Canadian and foreign investment income, it points you to the chart on the Federal Worksheet. Because the test turns on what the borrowed money is used for, tracing matters: you must be able to show that the borrowed dollars went into the income-earning investment.
How common Nigerian investments line up
| Use of the borrowed money | Can produce income other than capital gains? | Likely treatment |
|---|---|---|
| NGX shares in a company that pays or can reasonably be expected to pay dividends | Yes, dividends | Interest generally deductible |
| Nigerian T-bills or a naira fixed deposit | Yes, interest | Interest generally deductible |
| A Nigerian rental property let at a commercial rent | Yes, rent | Claimed against the rental income |
| Vacant land held for resale or appreciation | No | Not deductible under the line 22100 rule |
| Building or buying a house for you or family | No | Personal use, not deductible |
| An interest-free loan to a relative in Nigeria | No | Not deductible |
| An RRSP or TFSA contribution | n/a | Specifically not deductible |
Some cases are less clear: a growth start-up that has never paid a dividend, or a fund that only accumulates. Those turn on facts CRA will look at, so get advice before relying on a deduction. Brokerage commissions are not carrying charges at all; they are added to the cost or deducted from the proceeds of the shares.
A worked example
Example only: you borrow CAD 20,000 on a line of credit at an example rate of 7% and use it, in full, to buy NGX shares in a company with a dividend record.
- Interest for the year: CAD 1,400.
- At a 30% example marginal rate, the deduction is worth CAD 420 in tax.
- The dividends you receive are reported in Canadian dollars on your return, and Nigerian withholding on them can be claimed as a foreign tax credit (CRA line 12100 page).
- If, instead, you used CAD 8,000 of the loan for the shares and CAD 12,000 for a family car, only 40% of the interest (CAD 560) relates to the investment.
The deduction does not make the investment safer. A fall in the naira reduces the Canadian-dollar value of the shares and the dividends, while the loan stays fixed in Canadian dollars. See how a falling naira affects returns for a CAD-based investor.
Mistakes that cost the deduction
- Parking the loan in naira savings first, then spending part of it on personal costs. Once borrowed money is mixed and partly used for personal purposes, only the share still traceable to the investment counts.
- Assuming high yields make any asset qualify. The test is whether the investment can produce interest, dividends or rent, not how much it might grow. A plot in a fast-rising area still produces no income.
- Claiming the commission as interest. Broker fees on buying and selling shares belong in the capital gain or loss calculation, not on line 22100.
- Forgetting the income side. If you deduct the interest, CRA will expect to see the dividends, interest or rent reported too, converted to Canadian dollars at the rate for the day each amount arose.
Records that support the claim
- Loan or line-of-credit statements showing the draw and the interest charged.
- Transfer records showing the money leaving Canada and arriving in the Nigerian brokerage or bank account.
- Contract notes, CSCS statements or T-bill confirmations showing what was bought, and when.
- Dividend or interest advices from the registrar or bank.
Avoid mixing borrowed money with savings in one account before investing: it makes tracing harder. If the total cost of your foreign holdings passes $100,000 in the year, Form T1135 applies too (CRA Q&A, modified 19 October 2026).
Where Pryme fits
A clear paper trail is what makes the claim stand up. A Pryme account opened from Canada keeps naira and USD in separate balances, Swap records the rate and fee of each conversion, and you can generate verifiable statements and receipts with VerifyDoc.ai showing each payment to a broker. See how it works.
Questions people ask
Can I deduct interest on a loan used to buy Nigerian shares?
Generally yes, if the shares pay or can reasonably be expected to pay dividends and you can trace the borrowed money to them. CRA does not exclude foreign investments.
Is interest deductible if I borrow to buy land in Nigeria?
Not if the land can only produce a capital gain. CRA says interest is not claimable where the only possible return is a capital gain.
Where do I claim investment loan interest on my Canadian return?
On line 22100, carrying charges and interest expenses, using the Federal Worksheet chart if you have both Canadian and foreign investment income. Rental interest goes against the rental income.
Is interest on money lent to family in Nigeria deductible?
Not when the loan is interest-free or for personal purposes, because the borrowed money is not being used to earn income.
Sources
- CRA: Line 22100, carrying charges, interest expenses and other expenses (modified 20 Jan 2026) · accessed Oct 2026
- CRA: Line 12100, interest and other investment income (modified 20 Jan 2026) · accessed Oct 2026
- CRA: Questions and answers about Form T1135 (modified 19 Oct 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.