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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Whether legal fees to obtain support amounts from the estate of the person previously paying child support (dependant's relief) can be deductible.
Position: No.
Reasons: The payments do not constitute support amounts as defined in ss. 56.1(4). Moreover, no other provision of the Act allows a deduction for such expenses.
XXXXXXXXXX 2001-008767
Patrick Massicotte
January 9, 2002
Dear XXXXXXXXXX:
Re: Legal Fees for Dependant's Relief
We are writing in response to your letter of June 9, 2001, wherein you requested our comments regarding the interpretation of certain provisions of the Income Tax Act (the "Act"). We apologize for the delay in responding to your letter.
You inquire whether a deduction could be claimed in respect of legal fees incurred by a taxpayer seeking a payment for continued support (referred to as "dependant's relief") out of the estate of a deceased person who had been providing child support to the taxpayer while alive. You mention that pursuant to provisions of the Succession Law Reform Act of Ontario (R.S.O. 1990, c.S.26), where a deceased person has not made adequate provision for the proper support of his dependants, the court may order that such provision as it considers adequate be made out of the estate of the deceased for the proper support of the dependants. Where such payments are sought for the benefit of dependant children of the deceased person, you submit that the payments are really child support amounts.
Written confirmation of the tax implications arising from particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request pursuant to Information Circular 70-6R4. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. However, we are prepared to provide you with some general comments which may be of assistance.
A "child support amount" is defined in subsection 56.1(4) of the Act as any support amount that is not identified in the agreement or order under which it is receivable as being solely for the support of a recipient who is a spouse or common-law partner or former spouse or common-law partner of the payer or who is a parent of a child of whom the payer is a natural parent.
Furthermore, a "support amount" is also defined in that subsection as an amount payable or receivable as an allowance on a periodic basis for the maintenance of the recipient, children of the recipient or both the recipient and children of the recipient, if the recipient has discretion as to the use of the amount, and (a) the recipient is the spouse or common-law partner or former spouse or common-law partner of the payer, the recipient and payer are living separate and apart because of the breakdown of their marriage or common-law partnership and the amount is receivable under an order of a competent tribunal or under a written agreement; or (b) the payer is a natural parent of a child of the recipient and the amount is receivable under an order made by a competent tribunal in accordance with the laws of a province.
Although the Act deems an estate to be an individual and taxes it on that basis, it is nevertheless not a natural person and cannot have a spouse or common-law partner or former spouse or common-law partner from whom it is living separate and apart nor could it be considered to be the natural parent of a child. Thus, while a court order made pursuant to the provisions of the Succession Law Reform Act in Ontario may require an estate to continue making payments for the benefit of the children of a deceased person after his or her death, it is our view that payments from the estate to the surviving spouse or common-law partner or former spouse or common-law partner for the benefit of children of the deceased person would not constitute child support amounts for the purposes of the Act.
As a consequence, it is our view that the position outlined in paragraphs 17 to 21 of Interpretation Bulletin IT-99R5 Consolidated, Legal and Accounting Fees, would not be applicable to the situation you submitted, such that legal fees incurred to obtain a dependant's relief payment from the estate of a deceased person would not be eligible for a deduction. Furthermore, since no other provision of the Act applies, it is our view that no deduction can be claimed by a taxpayer in respect of legal fees incurred to obtain dependant's relief payments.
We trust the above comments are of assistance to you.
Yours truly,
Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
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