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: Are legal fees incurred to obtain supports amounts as defined in subsection 56.1(4) of the Act deductible on a cash or accrual basis?
Position: They may be deducted on an accrual basis.
Reasons: Paragraph 18 of IT-99R5 refers to legal fees incurred.
2004-010426
XXXXXXXXXX Karen Power, CA
(613) 957-8953
February 2, 2005
Dear XXXXXXXXXX:
Re: Legal Fees
We are writing in reply to your letter of November 22, 2004 requesting our views on whether legal fees incurred to obtain support amounts as defined in subsection 56.1(4) of the Income Tax Act are deductible on a cash or accrual basis.
We confirm that it is our view that qualifying legal fees (as provided in Interpretation Bulletin IT-99R5 and Income Tax Technical News No. 24) to obtain support amounts may be deducted on an accrual basis.
Yours truly,
Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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