As we head into tax season, we thought it was a good time to share some information about when legal fees may be tax deductible.
Section 3.81 of the Income Tax Folio S1-F3-C3 sets out when a recipient spouse may deduct legal fees. For your convenience, here’s the full text of 3.81:
Deductible legal and accounting fees
3.81 A recipient can deduct legal and accounting fees incurred to:
- 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;
- seek an increase in support payments;
- defend against a reduction in support payments;
- collect late support payments; or
- request that child support payments be non-taxable.
If any of the above situations apply to you, you can ask your lawyer for a letter setting out the portion of the fees you paid that were related to the relevant issue.
Remember: We are not, and do not profess to be, tax experts. If you have any specific tax-related questions about the deductibility of your legal fees, you should consult your tax advisor or accountant.
For more about tax treatment of legal fees in the family law context, check out my previous post here.
