Claiming Legal Fees (Case Law) For Tax Deduction in Child Support Matters

I don't know anything about this legal and tax stuff, but I cannot believe that a costs award would be taxed as income! You paid your legal fees out of post-tax income, and just because you are being reimbursed doesn't make it income again. That would be like buying something from a store, then returning it and getting your money back and being taxed on the refund!

The only thing I can see that would be complicated would be refiling a past income tax return if you had claimed for legal fees on it. If the other side later paid your costs, then you would have to remove the claim and correct your return. And surely it would be after actual payment was received, not just the order, because as we all know, that doesn't guarantee payment.
 
Just to clarify this, Rioe, it is an issue because we claim the initial costs as a deduction against income, so no, the taxes have not been paid.

Imagine a gross income of $100k, and legal costs of $30k in 2012. We deduct the costs and pay tax on a net income of $70k.

The trial ended the last week of December. The judge gives the decision in January, or later. The costs are awarded in 2013.

We now have received a tax deduction for $30k, but have actually spent little or none of it.

The costs award must be added back into income. The only point I am unclear on, I vaguely recall a form to adjust expense deductions for a previous year. I am not sure if this would be the route, or if the CRA would rather the costs (that specifically applied to the intitial deduction) be treated as income in the year they are received.
 
Thanks for your messages Mess. Just one clarification, are your required to report the income for the costs award in the year awarded or as they are received? So from your example, judge awards costs of $30k in 2013 but you don't actually receive any payment from the other party toward those costs. Surely you wouldn't have to claim it as income???
 
If you were a business you would count the money when it was earned, not when it was paid. A comparison would also be your last paycheque for the year usually is issued in January, but the money is counted for December. That being said, CRA is not going to complain if you are using "cash accounting" and reporting it when received, as long as it is reported.
 
I have spoken to this lawyer and yes the payor was able to deduct legal fees, but it was a shared parenting with offset amounts.

OrleansLawyer quick question from a tax court perspective:
Claiming Legal Fees in General:
The problem is the government is that it has placed this 40% mark that makes parent fight, but you can't go into court and argue receiver should be paying child support, you have to fight for access and then child support will continue. This puts issues into place that don't come out in court. As soon as you have a financial incentive to fight for more or less access you get people lying court. I would say that most family case are about money. At least from one side.
Some say that some fathers fight for access to reduce child support, if you accept that then you also have to accept that some mothers withhold access so they can collect more child support.

This is a double standard. To allow one parent to claim legal fees (for trying to get child support) and not allow the same legal fees to be claimed in defending the claim for child support.

In my view any access parent who is fighting to get more access could argue that they were fighting for their share of the child support. Both parents have a responsibility to provide for their children. So if a parent is fighting for 2% more access, going from 38% to 40% then they should be able to claim that they were fighting for child support from the primary parent. As such the claim for legal fees on taxes should be allowed.

Up until now the case law has been worded as a reduction in child support which is not allowed. Payor trying to get 40% access to reduce their child support payments.

What needs to be argued is a different approach. This would be for access parents of which I am not. I am a shared parent.

An access parent could argue that they are simply trying to collect their portion of the child support payments. That it is their position that they have and will continue to pay full table amount of child support. But that there is no child support, to support the children when they are with the access parent, as such they are fighting for the 2% increase to begin the process of collecting child support from the ex. byway of an offset amount. Worded in this way it is collecting not reducing child support payments as such should be allowed for tax purposes.

What do you think?
 
in this past year deductions didn't help much. i'm a contractor with 9000 income and after business expenses 6000 something. cuz.low income, was. no.benefit to claim it. got fulltime job the other day so I ill claim it later
 
The reason they let recipients claim it and not payors is because it actually normally makes no difference since recipients have such low income -the conspiracy behind the law!
 
involveddad75 said:
Some say that some fathers fight for access to reduce child support, if you accept that then you also have to accept that some mothers withhold access so they can collect more child support.
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This is a good point that others have made.

This is a double standard. To allow one parent to claim legal fees (for trying to get child support) and not allow the same legal fees to be claimed in defending the claim for child support.
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Now you are losing track. Child support is the right of the child, and it is an automatic entitlement. A case where a parent is seeking support is one where the money is already owed, and is not being paid.

In my view any access parent who is fighting to get more access could argue that they were fighting for their share of the child support.
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No, and this would set back the case for shared parenting by a couple of decades if parties, generally fathers, were going to court and going to the media with the argument that they want more access to the children so that they could pay less support. This would not fly in legal terms, but worse, it would justify the arguments of feminist groups, groups who lobby the governmnent very strongly.

From a legal standpoint you have it backwards. There is no entitlement to support until access is already in place. You argue for access, you reason that it is in the best interest of the child, and then you seek support on that basis. If you do it the reverse, you are simply displaying a motive of greed.

Up until now the case law has been worded as a reduction in child support which is not allowed. Payor trying to get 40% access to reduce their child support payments.
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Can you cite this law which words it as a "reduction" because I have never read it. Please read the Family Law Act - Child Support Guidelines Section 9. It is some litigants who often erroneously try to argue for a "reduction," and even then in most cases when they are whining on the internet, not when they preparing their court arguments.

An access parent could argue that they are simply trying to collect their portion of the child support payments...
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Honestly I think this is nonsense. There is no support whatsoever in law for this. You could not go to court and make this fly. It would require a complete revision of child support legislation.

Look, there are two ways to look at this. "I am going to court to change the law." This method DOES NOT WORK. The law does not work that way, except in minds of "Teapartyers" who rage against judges making laws. Judges do not make laws. They make interpretations, having to take into account superior law like the Charter, and take into account the will of Parliament and the intent of public policy.

The other method, for the ordinary Canadian, is to lobby your MP and MPP. In the case of the Child Support Guidelines, this is both a provincial and federal jurisdicition, so you have to get all provinces, all territories, and the federal government on the same side. Good luck with that.
 
Mess I think you took my post wrong.
The question to OrleansLawyer was a tax court question from a tax perspective with regards to claiming legal fees on your taxes, and how the federal government has created an unfair system when it comes to claiming legal fees on taxes.

It had nothing to do with arguments to be used in family court, or the child support guidelines. Anyone going into family court and arguing for access for financial gain is going to lose.
And I think the history of my previous posts on family court support this position.

But I do believe in equality and that I should be able to claim a portion of my legal fees for my case on my taxes, as a shared parent.
My post was about how others trying to get access in family court could possibility get around the limits of tax laws and tax court, so that they could claim a portion of their legal fees from a tax perspective.

As for the Case Law
CanLii.org: 2012 TCC 92 (CanLII)

The arguement in this case was for income retention,
had the argument been about getting child support from the other side by way of an offset, then perhaps they might have won.
 
Links17 said:
The reason they let recipients claim it and not payors is because it actually normally makes no difference since recipients have such low income -the conspiracy behind the law!
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Actually I believe the reason has more to do with business and civil law.
If I run a business and am having problems collecting a payment and have to take someone to court to get a payment for services I have done for them. Then that is a business expense and can be written off, and thus legal fees for enforcing income can be written off.

That's how I understand why legal fees for child support can be claimed.
 
question to OrleansLawyer was a tax court question
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I would preface any response by observing that the vast majority of my posts deal with family issues. While I make no claim to being a professional (see disclaimer at bottom), I would also observe that the intersection of family law and tax law is much like the intersection of war and famine; seldom do those who deal with one have training in dealing with the other, and the marriage of the two is generally deleterious for everyone involved.

In my view any access parent who is fighting to get more access could argue that they were fighting for their share of the child support.
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Some people make this argument when they do their taxes.

Was there an effort to secure support, and was it made in good faith?
CanLII - 2010 TCC 209 (CanLII)

However, the claim must be legitimate. Simply throwing legal fees under that heading (even if pursued for support, if the claim was frivolous) will be unlikely to succeed:
CanLII - 2011 TCC 427 (CanLII)

DISCLAIMER:
Everything said in this, and any other, message is not intended to be taken as legal advice. I do not hold myself out to be a lawyer, adult or literate. Any resemblance this or any other message may have to legal advice or common sense is entirely coincidental. This message was generated through the combination of a monkey hitting a keyboard with a rock and advanced spell check software.
 
My experience with line 232 of the T1 is that I had received a letter from my family lawyer around tax time. I was totally unaware of this claim since I was the payor, however the explaination was that technically in a shared custody arrangement both are considered to be payors, it is the difference that is calculated for the offset.

The letter stated the Income Tax Act and the amounts to obtain child support of over $7000 each for the 2011 and 2012 tax years. (2 seperate letters for each year, but I had claimed them together for 2012). Eligible amount to claim was stated as being approximately 20% of those amounts, so for both years they had totaled over $2900.

Having work related legal benefits of $500 per year, I had to recalculate my claim by taking $1000 off of the total amount for the 2 years and then taking 20% of that amount for my final claim amount.

Being honest with CRA only helps you down the road and at the end of the day the $2700 credit was better than a kick in pants.
 
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