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.
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921728 |
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A. Payette |
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(613) 957-2139 |
August 26, 1992
Winnipeg District OfficePersonal and General Enquiries Section
Attention: D. O'Grady 19(1)
Legal Fees - Paragraph 60(o) of the Income Tax Act (the "Act")
This is in reply to your memorandum of May 29, 1992 wherein you requested our opinion on the deductibility of legal fees under paragraph 60(o) of the Act in the following situation.
FACTS
24(1)
Your opinion
21(l)(b)
Our opinion
It is the Department's practice (as indicated in paragraph 6 of Interpretation Bulletin IT-99R4) to allow a deduction under paragraph 60(o) of the Act in respect of legal and accounting fees incurred for advice and assistance in making representations after the taxpayer has been informed that his income or tax for a taxation year is to be revised, whether or not a formal notice of objection or appeal is subsequently filed.
It is the Department's position that any legal or accounting costs relating to the filing of a voluntary disclosure are not deductible by the taxpayer under paragraph 60(o) of the Income Tax Act. However, once the taxpayer has been informed by the Department that his or her income or tax for the year(s) in question is to be revised, it is the Department's position that the legal or accounting costs expended by the taxpayer after this time to support his or her position would be deductible in accordance with the Department's policy in IT-99R4.
More specifically, in the present situation, the Department was not formally advised of the identity of the taxpayer and other pertinent details until the Department received 19(1) letter of June 19, 1991. It is therefore reasonable to consider that a revision of income or tax could have occurred only after that point in time had the Department not decided to grant administrative relief by waiving Part I and Part X.I tax on the excess RRSP contributions. As a result, it is our opinion that legal and accounting fees incurred by the taxpayer after June 19, 1991, could reasonably be deductible under paragraph 60(o) of the Act according to the Department's policy enunciated in IT-99R4.
We trust these comments will be of assistance to you.
P.D Fuocofor DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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