Case Law - Legal Fees to get Offset Child Support Tax Deductible

[Kkc]

My adjudicated order reads

He pays her x in ss
He pays her x in cs
She pays him x in cs

Mine required a motion and I have legal fees stretched over 3 years
Firstly, a motion that resulted in consent to give me the ability to vary pre trial and impute pre trial
Second a court appearance to grant us a long motion to vary and impute
Thirdly the motion itself

It was a lot of money..hopefully cra doesn’t ask what my cost award was

[DHTO]

Thanks so much! I will ensure that my SA contains words similar to what you mentioned.

[nofrills]

I think this was me.

I was originally reviewed by the CRA on the wording of my SA agreement, where by the word "offset" was used and they denied my eligible dependent credit. I had my lawyer re-draft my SA agreement to remove the offset language and make separate payments. Ex agrees to sign, then her lawyer tells her not to and I waste 2k on lawyer fees.

However, at the same time, I was in process of responding and making an appeal to the CRA. Throughout the process, I consulted my lawyer on how to respond to the CRA and review my appeal letter. I categorized this as legal fees in responding to the CRA.

In the end, the CRA reversed their decision and allowed the credit with the original wording in my SA. Even though it used "set-off", the key to my appeal was "each party has a legal obligation to pay the other support" was in my original SA. (I would recommend not using "set-off" anywhere in a SA, just lots of red flags for the CRA to review you)

A year later, the CRA reviews my legal fees. They ask for invoices and I provide. All my invoices had a description of the work done. (ie review of CRA letter, Eligible dependent consult, review of CRA response). I had asked my lawyer to ensure she wrote CRA on every invoice. They allowed my legal fees.


I hope that helps.

[Kkc]

I was so lucky on my motion to vary an interim order. She had imputed income and adjudicated we had shared parenting and the court order is clear that I pay her and she pays me.
I pay her…and she forgets to pay me

[rockscan]

Your lawyer will provide a receipt with the fees clearly listed. I believe it depends on who initiated the motion for support and the lawyer will know all the rules around it. Either way, cRA will only accept proper receipts from the lawyer not something provided by you.

[blinkandimgone]

Sidenote: only the recipient parent can claim the deduction, not the payor.

If your agreement has you both listed as recipients and you had legal fees related to establishing yourself as a recipient, you can claim your legal fees. Be prepared for CRA to ask for proof that the money is actually changing hands both ways rather than you paying just the difference, as this shows you as the only payor as you are not in receipt of anything.

It can be a pain, but for best results with CRA, it's beneficial to have each of you actually make the full payment to each other so you can both have proof that money is exchanging hands and claim your credits.

[blinkandimgone]

Hi all,

Does anyone happen to have a link to a case law or CRA document that identifies that if a separation agreement is written so that Spouse A pays XXX to Spouse B, and Spouse B pays XXX to Spouse A then the legal fees are tax deductible under line 22100?

Thanks!

You don't use the seperation agreement for this, you need your receipts from the lawyer that breaks down your costs paid with an adjoining letter stating how much of that was spent to establish or secure child support payments.

https://www.canada.ca/en/revenue-age...egal-fees.html

[DHTO]

Not the actual child support, but the legal fees to secure the start of child support.

[DHTO]

Hi all,

Does anyone happen to have a link to a case law or CRA document that identifies that if a separation agreement is written so that Spouse A pays XXX to Spouse B, and Spouse B pays XXX to Spouse A then the legal fees are tax deductible under line 22100?

Thanks!