Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: According to Income Tax Technical News No. 24, legal fees are deductible when incurred to obtain spousal support. However, if no support is granted to the taxpayer by the court, are the legal fees still deductible?
Position: Yes
Reasons: Legal costs to obtain support or to vary support payments are incurred to earn income from property according to jurisprudence, and are allowed as a deduction under s. 18(1)(a). It has been accepted by the courts that an expense is deductible even when there is no actual income resulting from the expense.
XXXXXXXXXX
2011-041766
B. Ruttan-Morillo
February 17, 2012
Dear XXXXXXXXXX ,
We are writing in response to your email of August 16, 2011 concerning the deductibility of legal costs incurred in respect of a claim for spousal support where the claim was unsuccessful.
Generally, legal costs incurred to establish spousal support payments (amounts receivable on a periodic basis for the maintenance of the recipient) are deductible as they are considered to be incurred for the purpose of earning income from property. It is our view that these legal costs are still deductible even where the claim for spousal support was unsuccessful as long as the claim was a bona fide claim with a reasonable chance of success.
We trust these comments will be of assistance.
Yours truly,
Nerill Thomas-Wilkinson
Manager
for Director
Reorganizations Division
Income Tax Rulings Directorate
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2012
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2012
Email this Content