Deducting Legal Fees

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.

About Leisha Murphy

Partner/Mediator – Vancouver

After being a family lawyer for over 13 years, coupled with my own personal experience with divorce, I have come to understand the difficult transition that comes with the end of a relationship. This experience has put me in the unique position of being able to provide clients with a clear picture of what is to come and how to plan for it. As well as provide clients with guidance and education on how to deal with the day-to-day realities of a separation.