Neeb v. The Queen, 97 DTC 895 (TCC)

Legal fees incurred by the taxpayer in unsuccessfully defending narcotics charges were non-deductible as being of a personal nature (he was not seeking to justify the manner in which he carried on his business but, rather, to keep himself out of jail and to put the Crown to the proof that he carried on the business in question at all).

In finding that the taxpayer, who had carried on a narcotics business, could not deduct the value of hashish that had been seized by the American authorities, Bowman T.C.J. stated (at p. 902) that he could "see no reason why the Canadian public should be expected to subsidize a drug dealer's loss through forfeiture of illegal drugs, by allowing him to write-off the cost of drugs so forfeited, even if that cost had been established".

The taxpayer incurred legal expenses in defending against narcotics charges. Before going on to find that these expenses were non-deductible on other grounds, Bowman T.C.J. rejected a Crown submission that they were non-deductible because they were incurred after the narcotics business had ceased, stating (at p. 903) that the Emerson case (86 DTC 6184) had "no application to the case of liabilities that arise directly from a business that was carried on but that are asserted after that business had ceased".