Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Whether there is a tax deduction in respect of legal fees incurred to collect severance.
Position: Yes, to extent an amount of retiring allowance is received in the year or a prior year.
Reasons: Wording of 60(o.1).
XXXXXXXXXX 990951
July 28, 1999
Dear XXXXXXXXXX:
RE: Legal Expenses Incurred to Collect Severance Pay
This is in reply to your letter of March 21, 1999, in which you asked whether you have any recourse in respect of legal expenses you incurred in 1993 to collect severance pay. You did not indicate whether you have collected any amount of severance as a result of the litigation.
Enclosed for your information is Interpretation Bulletin IT-99R5 Legal and Accounting Fees. In particular, please note the comments at paragraphs 25 through 27. A tax deduction is available for all or some of these expenses pursuant to paragraph 60(o.1) of the Income Tax Act, but only if the litigation is successful and an amount of severance or retiring allowance is received. Please refer to the bulletin for more details concerning the deduction.
We trust this information is of assistance.
Yours truly,
P. Spice
for Director
Financial Industries Division
Income Tax Rulings &
Interpretations Directorate
