Danika Beaulieu – February 2019
It’s that time of year again – tax season. If you are expecting a return, this time of year can be quite exciting. However, if you are not expecting a return, tax season can be quite stressful. You cross your fingers and toes hoping that the correct amount of taxes was deducted from your income in hopes that you will not find yourself with a large tax bill owing to CRA.
This time of year can be particularly challenging for people who have had to spend a significant amount of money on legal fees for their family law matters in the past year. The thought of receiving a large tax bill after spending a lot of money on legal fees can be quite unnerving. There is a silver lining, though. If you provided payment for legal fees in relation to family law matters in the past year, you may be able to claim those fees on your taxes.
In particular, if you are the recipient of support, you can deduct the legal and accounting fees incurred to do the following:
- collect overdue support payments owing;
- establish the amount of support payments from your current or former spouse or common-law partner;
- establish the amount of support payments from the legal parent of your child where the support is payable under the terms of a court order; or
- try to get an increase in support payments.
If you are the payor of support, although you may not be able to claim any of your legal and accounting fees on your taxes, you may be able to deduct your support payments. Generally, spousal support payments made under a Court Order or a written Agreement for the maintenance of the recipient are taxable to the recipient and deductible by the payor. This rule does not apply to child support payments, nor does it apply if the support payments are not made pursuant to a Court Order or a written Agreement.
For more information, please view the following publication from the Canada Revenue Agency: https://www.canada.ca/content/dam/cra-arc/formspubs/pub/p102/p102-17e.pdf
Please note that there are some exceptions to these rules, so you may wish to speak to an accountant to determine whether you are eligible to claim your legal fees and/or your support payments on your taxes. If you believe you may be eligible to claim your legal fees, please speak to your legal counsel at MDW Law to obtain the necessary correspondence to prove the expense.