Key Canadian Tax Decision Allows Deduction of Divorce and Family Law Legal Fees Related to BC Child Support

June 14th, 2010

Lorne MacLean -New Tax Deduction for Legal Fees to Claim BC Child Support

A new Tax Court ruling affecting BC child support legal fee deduction could help you save thousands provided your BC family law counsel is aware of this important development. Come see The BC child support lawyers at MacLean Family Law Group to learn more about how this important ruling affects you. In short a new case has expanded the class of people able to deduct legal fees to claim BC child support.

If you are seeking child support from you former spouse you are entitled to a CRA tax deduction of those legal fees against your income tax payable thanks to Trignani v. The Queen [2010] TCC 209.

In this case, the separating parent’s August 2000 agreement stipulated joint custody for the child and the appellant was to pay child support of $350/month. In May 2001 the Ontario Superior Court of Justice ordered that the appellant would have sole interim custody of the child with the spouse having interim access 50 percent of the time with supervision. And, the appellant was to continue to pay $350/month in child support.

For the majority of the time the appellant had physical custody of the child because appropriate supervision at the spouse’s residence was not available.

The Honourable Justice Judith Woods in her decision dated April 9, 2010 notes that as long as the person seeking, or pursuing child support against the other parent does not abandon their claim for child support before the relevant legal services were provided; and, that it has not been determined by a court that you do not have a pre-existing right to child support because that right was extinguished by a court order, then you are entitled to the deduction in computing your income.

It has generally been accepted that legal expenses incurred to obtain child support are deductible in computing income: Wakeman v. The Queen, [1996] 3 CTC 2585; McColl v. The Queen, 2000 DTC 2148; Sabour v. The Queen, [2002] 1 CTC 2585 (in obiter at para 9); and Rabb v. The Queen, [2006] 3 CTC 2266. This principle is also accepted by the Canada Revenue Agency, as evidenced by Interpretation Bulletin IT-99R5, at para 17.

With respect to child support, legal expenses have been considered to be on current account on the basis that there is a pre-existing right by virtue of a legislative obligation on each parent to support their children.

A note of caution must be raised: The person seeking child support or pursuing a claim for child support must be making a bona fide claim that is not frivolous, and must have a reasonable prospect of success. You will also need to have your lawyer keep track what portion of fees related to child custody and get a letter from them that sets out the correct amount.

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