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 Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Whether legal fees incurred to enforce visitation rights contained in a court order are deductible in the same way as legal fees incurred to enforce the payment of maintenance.
Position TAKEN:
No.
Reasons FOR POSITION TAKEN:
Visitation rights is a non-income issue and therefore fees incurred to enforce those rights are amounts not laid out to earn income.
May 10, 1995
XXXXXXXXXX
Dear XXXXXXXXXX:
I am writing in reply to the letter of May 4, 1995, from XXXXXXXXXX of your office, asking for clarification of the Department's position on the deductibility of legal fees paid out under the circumstances set out in the letter.
You have described a situation in which a husband and wife have divorced and under the terms of a court order the former husband has a legal obligation to pay child support for the children of the marriage and the former wife is obligated to provide information concerning the children as well as visitation rights. The former wife moved from British Columbia to the Maritimes with the children. The former husband has been able to visit on two occasions but the issue of visitation rights remains unresolved.
It is the constituent's understanding that if the former husband defaults on his obligation to pay child support and the former wife incurs legal costs in order to enforce their payment, such costs would be considered deductible in computing her net income. If, on the other hand, the former husband incurs legal costs in order to enforce visitation rights granted under the court order, his costs would not be considered deductible by him in computing his net income for the year.
The constituent's understanding is correct. Where an individual has an existing right to income, which when received would be included in income, an expense laid out to earn that income would be deductible against the income. Under the circumstances set out above, the former wife has an existing right under the terms of the court order to an amount of child support. On the assumption that the child maintenance amount otherwise meets the criteria for inclusion in the former wife's income, a legal expense incurred to enforce its payment would be deductible. On the other hand, the former husband's legal costs are related to visitation rights, a non-income issue. The expense would not be considered laid out to earn income and would, therefore, not be deductible.
As requested in your letter, further questions may be directed to Mr. Bryan Dath, Director of the Business and General Division in the Income Tax Rulings and Interpretations Directorate of the Department. He can be reached by writing to 15th Floor, Albion Tower, 25 Nicholas Street, Ottawa, Ontario K1A 0L8 or by telephone at 957-2089.
Yours sincerely,
Pierre Gravelle, Q.C.
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