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When are attorney fees tax deductible On what basis? from thelawadvisory.com

Are Tax Attorney Fees Deductible with CRA?

Introduction

Tax attorney fees can sometimes be expensive, especially if you're dealing with complex tax issues. However, the good news is that these fees may be tax-deductible in certain situations. In this article, we'll be discussing whether tax attorney fees are deductible with the Canada Revenue Agency (CRA).

What are Tax Attorney Fees?

Tax attorney fees are the fees that you pay to a tax lawyer or attorney for their services in helping you with tax-related issues. These issues can range from preparing your tax returns to representing you in court if you're facing a tax-related dispute.

When are Tax Attorney Fees Deductible?

Tax attorney fees are generally deductible if they are incurred for the purpose of earning income from a business or property. For example, if you hire a tax attorney to help you with a tax dispute related to your rental property, the fees you pay may be tax-deductible.

Limitations on Deductibility

It's important to note that there are limitations on the deductibility of tax attorney fees. If the fees are incurred for personal reasons, such as preparing your personal tax return, they will not be tax-deductible.

What does the CRA say about Tax Attorney Fees?

According to the CRA, tax attorney fees are generally deductible if they are incurred for the purpose of earning income from a business or property. However, the CRA may challenge the deductibility of these fees if they believe that they are not reasonable or necessary.

Other Deductible Legal Fees

In addition to tax attorney fees, there are other legal fees that may be tax-deductible. These include fees paid for legal advice related to a business, fees paid for collecting salary or wages owed to you, and fees paid for defending yourself against criminal charges related to your business.

Non-Deductible Legal Fees

On the other hand, there are also legal fees that are not tax-deductible. These include fees paid for personal legal matters, such as getting a divorce or drafting a will, and fees paid for defending yourself against criminal charges that are not business-related.

Documentation Requirements

If you want to claim tax deductions for your legal fees, you'll need to keep detailed records of the fees you paid and the purpose for which they were incurred. This documentation will be important in case the CRA challenges the deductibility of your fees.

Conclusion

In conclusion, tax attorney fees may be tax-deductible if they are incurred for the purpose of earning income from a business or property. However, there are limitations on the deductibility of these fees, and the CRA may challenge their deductibility if they believe that they are not reasonable or necessary. If you're unsure whether your tax attorney fees are tax-deductible, it's always best to consult with a tax professional.

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