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  • Lawyer Fee's...

    Are we able to use any portion of our legal fees on our income tax?
    I understand in a business situation it is appropriate, but would think personal is different. Anyone know?
    Thanks
    Tangled

  • #2
    Tangled,

    I believe you could write off a portion of your legal fees if the fees were generated by trying to obtain support for yourself or your children. Other than that, I believe CCRA will not allow the deduction.


    lv

    Comment


    • #3
      LV is correct. I have spoken to Revenue Canada about this and as long as the legal fees were incurred to secure support payments it can be claimed.

      MominOnt

      Comment


      • #4
        In November 2006 I incurred $3671.00 in legal fees to response to applications filed by my ex to acquire a support variation. The case was heard and judgement was awarded in my favor. Can I claim these fees in my 2006 taxes? I am in Alberta. How do I go about claiming these fees?

        Comment


        • #5
          wildrose,

          Came across this on the CCRA website:

          http://www.cra-arc.gc.ca/E/pub/tp/it...tml#P137_16374

          Support Amounts

          17. Legal costs incurred in establishing the right to spousal support amounts, such as the costs of obtaining a divorce, a support order for spousal support under the Divorce Act or a separation agreement, are not deductible as these costs are on account of capital or are personal or living expenses. However, since children have a pre-existing right, arising from legislation, to support or maintenance, legal costs to obtain an order for child support are deductible. Legal costs of seeking to obtain an increase in spousal or child support, or to make child support non taxable under the Federal Child Support Guidelines, are non-deductible.

          18. Legal costs incurred to enforce pre-existing rights to interim or permanent support amounts are deductible. A pre-existing right to a support amount can arise from a written agreement, a court order or legislation such as sections 11 and 15.1 of the Divorce Act with respect to child support, or Part III of the Family Law Act of Ontario, and enforcing such a right does not create or establish a new right; see The Queen v. Burgess, [1981] CTC 258, 81 DTC 5192 (F.C.T.D.). In addition, legal expenses incurred to defend against the reduction of support payments are deductible since the expenses do not create any new rights to income; see The Attorney General of Canada v. Norma McCready Sembinelli, [1994] 2 CTC 378, 94 DTC 6636 (FCA.).

          ¶ 19. The legal costs described in ¶ 18 above are deductible even though an amount received as a "child support amount," as described in subsection 56.1(4), is not included in the income of the recipient. While "exempt income" in subsection 248(1) is defined as property received or acquired that is not included in income, the definition excludes "support amounts"; therefore, the deduction of costs incurred in respect of support amounts is not denied by virtue of paragraph 18(1)(c) as being exempt income. For a discussion of "support amount" and "child support amount," see the current version of IT-530, Support Payments.

          ¶ 20. A person who incurs legal expenses is not entitled to deduct them when they are incurred in connection with the receipt of a lump sum payment which cannot be identified as being a payment in respect of a number of periodic payments of support amounts that were in arrears. The lump sum payment however is generally not required to be included in income.

          21. From the payer's standpoint, legal costs incurred in negotiating or contesting an application for support payments are not deductible since these costs are personal or living expenses. Similarly, legal costs incurred for the purpose of terminating or reducing the amount of support payments are not deductible since success in such an action does not produce income from a business or property. Legal expenses relating to obtaining custody of or visitation rights to children are also non-deductible.

          In your circumstance, I believe your legal costs are deductible less anyhting you receive in a costs award from the court if any awarded.

          lv

          Comment

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