31 October 2025 Internal T.I. 2025-1067731I7 - Land Rezoning Fee

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: Whether the Zoning By-law Amendment application fee paid to the XXXXXXXXXX for a zoning by-law amendment is deductible pursuant to paragraph 20(1)(cc).

Position: The application fees paid as expenses incurred in making a representation to the XXXXXXXXXX relating to a business carried on by the taxpayer are likely deductible.

Reasons: Legislation.

XXXXXXXXXX									2025-106773
										Troy Neave, CPA, CA

October 31, 2025

Dear XXXXXXXXXX:

Re: Deductibility of application fees paid to a municipality

This is in reply to your correspondence dated June 3, 2025, in which you requested clarification of the views in document 2001-0109617 – Representation Expense, and specifically, whether an application fee paid to a municipality for a zoning by-law amendment in order to construct a residential property is deductible pursuant to paragraph 20(1)(cc) of the Income Tax Act (“the Act”). You also provide that in this case, subsection 18(3.1) of the Act does not apply.

Our Comments

This technical interpretation provides general comments about the provisions of the Act and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R12, Advance Income Tax Rulings and Technical Interpretations.

A taxpayer’s income as determined under subsection 9(1) of the Act is subject to the particular rules set out in Part I of the Act, including the general limitations of subsection 18(1). Subsection 18(1) contains several limitations concerning the deductions permitted under the Act in computing the income of a taxpayer from business or property. However, subsection 20(1) provides certain exceptions to the limitations imposed by paragraphs 18(1)(a), 18(1)(b) and 18(1)(h).

Paragraph 20(1)(cc) of the Act permits a deduction for an amount paid by the taxpayer in the year as or on account of expenses incurred by the taxpayer in making any representation to any level of government in Canada, provided that the representation relates to a business carried on by the taxpayer.

In document 2001-0109617, we expressed the views that the term “in making any representation” in paragraph 20(1)(cc) of the Act is broad enough to include making an application to a government or public body, such as for patents. The deductible expenses include not only those of presenting and monitoring the application but also those of obtaining and preparing the information on which it is based. It further stated that the portion of the legal fees billed that do not relate to the application of a patent, such as reimbursements of registration fees paid by the law firm to the applicable patent issuing authorities would not qualify as a deduction pursuant to paragraph 20(1)(cc).

In other words, any expenses incurred to register a patent with an applicable patent issuing authority is not deductible pursuant to paragraph 20(1)(cc) of the Act because it is an expense incurred as a consequence of a successful representation. Similarly, a fee charged by a municipality for a building permit is not deductible pursuant to paragraph 20(1)(cc) because the cost of obtaining a permit generally does not relate to a representation. However, the portion of the legal fees billed that do relate to the application of a patent would qualify as a deduction pursuant to paragraph 20(1)(cc).

Where a representation is related to the business carried on by the taxpayer, as part of an application by a taxpayer to a municipality to amend its by-laws, it is our view that the phrase “in making any representation” in paragraph 20(1)(cc) of the Act is broad enough to include the cost associated with making an application to a municipality for a zoning by-law amendment. Thus, while the determination is a question of fact, the by-law amendment fee would likely be deductible pursuant to paragraph 20(1)(cc) of the Act.

We trust our comments will be of assistance.

Yours truly,

Sandro D’Angelo, CPA, CMA
Section Chief
Business and Capital Transactions Section
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch