If I borrow cash in my margin trading account which happens to be an RRSP account, does the interest on that money become tax deductible from my income? I know if I put money in my RRSP from my salary income, it becomes tax deductible, but is it the same for money borrowed from margin account?
I believe your question is based on a false premise.
First, no broker, that I know of, provides an RRSP account that is a margin account. RRSP accounts follow cash settlement rules. If you don't have the cash available, you can't buy a stock. You can't borrow money from your broker within your RRSP.
If you want to borrow money to invest in your RRSP, you must borrow outside from another source, and make a contribution to your RRSP. And, if you do this, the loan interest is not considered tax deductible.
In order for investment loan interest to be tax deductible, you'd need to invest outside of a registered type of account, e.g. using a regular non-tax-sheltered account. Even then, what you can deduct may be limited.
You can claim the following carrying charges and interest [...]
- most interest you pay on money you borrow for investment purposes, but generally only if you use it to try to earn investment income, including interest and dividends. However, if the only earnings your investment can produce are capital gains, you cannot claim the interest you paid.
You cannot deduct on line 221 any of the following amounts:
- the interest you paid on money you borrowed to contribute to a registered retirement savings plan, a specified pension plan, a registered education savings plan, a registered disability savings plan, or a tax-free savings account (TFSA);