Family Law... Tax Time and Your Legal Bills

Monday, February 8th, 2016
Posted in: Family Law by Christine Doucet, Partner

Christine Doucet – February 2016

Tax Time – Certain legal fees are tax deductible

It’s that time of year again – tax time.  Some Canadians will be pleasantly surprised to discover that the fees they paid to their family lawyer are tax deductible.

Line 221 of the CRA income tax return allows Canadians to deduct legal fees incurred in an effort to collect child or spousal support.  Not all legal fees qualify.  Payors of child or spousal support cannot deduct the legal fees that they incurred, nor can people deduct their fees incurred to divide matrimonial property or resolve a custody dispute.

Each February, MDW Law proactively sends letters to clients who qualify for the deduction.  The letter breaks down the portion of the fees the client has spent on efforts to collect child or spousal support, as opposed to other aspects of his/her legal matter.  The letter can be submitted as a receipt to CRA.

The following is a detailed list of the family law matters for which legal fees are tax deductible:

An Information Bulletin on the CRA website entitled “Line 221 Interest Charges and Carrying Expenses” provides more information: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/221/menu-eng.html.

 

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