Claiming Legal Fees For Tax Deduction in Spousal Support Matters

[18] The first argument appears to be based on a long-standing principle that has been applied in the context of spousal support. Under this principle, legal fees incurred to establish a right to spousal support were considered to be on account of capital and not deductible by virtue of s. 18(1)(b). This is in contrast to fees incurred to enforce a pre-existing right, which are on current account.

[19] More recent judicial decisions have questioned the correctness of this principle and it appears that the CRA no longer follows it: Nissim v. The Queen,1998 CanLII 184 (TCC), [1999] 1 CTC 2119; Income Tax Technical News, No. 24, October 10, 2002. At this point, however, the jurisprudence is not clearly established: Nadeau v. The Queen, 2003 FCA 400 (CanLII), 2003 FCA 400, at para. 7.
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Trignani v. The Queen, 2010 TCC 209 (CanLII)
 
Tayken you did nothing wrong - you merely gave the poster your opinion. I think alot of people on this forum rely heavily (too much so?) on your giving us legal cases to look up. Thank you for the information you provide to us. I am always quite impressed by the time and trouble you take to help everyone out. Don't let one little comment from someone put you off. You DO make a difference and help people and we are extremely grateful.

If anyone is interested I got a letter from CRA today telling me my audit was ok for 2010. This is the 2nd time they audited me (ex's g/f no doubt). I don't get upset when they audit me, I merely send them the info they request. As with most CRA issues, they have their rules and regulations but ultimately it comes down to the assessor. There is an appeal process if you disagree with the decision. Not a big mystery as CRA provides plenty of information should you decide to appeal a decision. You certainly don't have to be a lawyer to appeal and you don't have to cite any case law to appeal. Just be prepared to wait a long time for decisions and be assured that if you owe them money, and your appeal is unsuccessful, you will pay hefty interest.
 
I meant to say that it was the 2nd time I was audited for 2010. I get audited every year. No big deal. They're just doing their job I guess.
 
The other threads for which OrleansLawyer provided guidance on how to estimate what is "tax deductible" should be linked.
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To save people searching, a quick summary would be that tax lawyers and family lawyers seldom have overlapping practices and, therefore, it is a crap shoot to me.

The discussion within this thread includes a number of cases that note up well. It would be prudent to ask your lawyer to include a letter with the bill to apportion a percentage (or number) to the deductible categories since a paper shield is better than nothing.
 
My question is if the Judge order cost at trial of 75000 and stated that 7500 was atributed to a support order. Can I get a letter from my lawyer stating that i spent 40000 in legals for support. Will Cra accept the letter from the unethical lawyer lol. stated that the client spent 40000 on legals even when the judge ruled only 7500 was used for support arguement
 
arabian said:
You can only claim money which you actually paid - not what your bill is.
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The other side was ordered to pay the amount and the judge ordered 7500 as support order then can the respondent claim 40000 if the lawyer provide a letter which is different then what the judge ordered will CRA accepted this
 
If you spent 40,000.00 in legal fees defending a support order then you can claim it. That is assuming that you actually paid the money.

Anytime you deal with CRA be prepared to PROVE you actually paid something - namely, receipts or bank records.
 
The other side was ordered to pay the amount and the judge ordered 7500 as support order then can the respondent claim 40000 if the lawyer provide a letter which is different then what the judge ordered will CRA accepted this
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For clarity:
You paid 75,000 in legal fees;
You were awarded costs of 7,500, specifically to cover the entirety of the portion of fees to obtain support payments; and
You want to know if you can, based on a letter from your lawyer, claim 40,000 was spent on obtaining support?
 
OrleansLawyer said:
For clarity:
You paid 75,000 in legal fees;
You were awarded costs of 7,500, specifically to cover the entirety of the portion of fees to obtain support payments; and
You want to know if you can, based on a letter from your lawyer, claim 40,000 was spent on obtaining support?
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That is exactly correct. If the Judge only award 7500 for legal fees to be attributed to support.
 
If I read this correctly, the 7500 was determined by the judge to be the amount of legal costs attributable to support?

And I assume this breakdown may have been because some issues went one way, some another, so the breakdown of costs was meaningful to the judge's award.

This would mean that your 7500, attributable to support, was paid by the other party. You are not out of pocket for that amount, so you would have a hard time justifying this to CRA in order to use it as a tax deduction.

Especially if the CRA requests a copy of the court order, and the order specifies the costs.
 
Some people like to call their lawyers 3 x /day. Some people like to meet with their lawyers every week. Some people have their lawyers fire out letters on their behalf every week. My point is that if you legitimately spent money on legal fees and disbursements to defend your spousal support you may claim what you spent. My opinion on what you SHOULD have spent isn't relevant. I believe you claim what you actually paid your lawyer.

Some people on here have large legal bills others do not. I do not think it is the job of CRA to critique whether or not a person spends too little or too much on a lawyer or accountant.

As I said before, be sure that you can provide corroborative documentation to back any and all of your claims.
 
I somehow doubt that the judge looked at your detailed legal bill and determined that $7500 of the total was for SS. More likely he did some ball-park guestimates and came up with a number he thought was reasonable.

I'd be pretty confident in using my lawyer's breakdown ... assuming YOU can defend it to CRA - look at the line items and make sure. Who knows how much care the lawyer put into the calculation...it's not his 'junk' on the table.

So if your lawyer says it was $40k for SS, claim $40k-$7.5k = $32.5K.
 
Thank you

Thank you

Hey, thank you everyone for this thread. Its very helpful. I've already sent my lawyer a note about getting letters for my tax return next year.

Hopefully, her compiling the letter doesn't cost more than the deduction.

QUESTION: IS THERE A MAXIMUM DEDUCTION FOR THESE FEES THAT CAN BE CLAIMED? IF SO, WHAT IS IT?
 
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