March 3, 2016 By: Pam MacEachern
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It’s tax time!

Don’t forget that legal fees incurred with respect to the enforcement or establishment of child and/or spousal support are normally tax deductible by the support recipient.

Canada Revenue Agency’s position on when legal fees related to child and spousal support are deductible has changed from time to time. It is always best to check with your accountant or CRA’s website for up-to-date information. See below CRA’s position on deductions as of February 2016.

  1. A recipient can deduct, on line 221 of their income tax and benefit return, legal fees incurred to:
  • Collect late support payments
  • Establish the amount of support payments from their current or former spouse or common-law partner
  • Establish the amount of support payments from the legal parent of their child (who is not their current or former spouse or common-law partner) where the support is payable under the terms of a court order
  • Try to get an increase in support payments.
  1. A recipient can also deduct, on line 232 of their income tax and benefit return, legal fees incurred to try to make child support payments non-taxable.
     
  2. A recipient cannot claim legal fees incurred to:
  • Get a separation or divorce
  • Establish child custody or visitation rights.
  1. Legal fees paid to collect a lump-sum payment, which does not qualify as a support payment, are not deductible.
     
  2. If you pay support, you cannot claim legal costs incurred to establish, negotiate, or contest the amount of support payments.
     
  3. You must reduce your claim by any award or reimbursements you received for these expenses. If you are awarded the cost of your deductible legal fees in a future year, include that amount in your income for that year.

CRA will normally ask you to provide evidence of the legal fees that you claim to be tax deductible, such as a letter from your family law lawyer or copies of your invoices and proof of payment. 

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2017 Nelligan O’Brien Payne LLP.

Service: Family Law