After noting that professional fees incurred under the voluntary disclosure program are deductible under s. 60(o) once CRA commences its review, CRA went on to state:
Thus, professional fees incurred by a taxpayer to make an application by virtue of the Program would be deductible only to the extent that:
a) they are incurred to earn income from a business or property;
b) they are not capital expenditures.
In general, reasonable fees and expenses incurred for the purpose of obtaining advice and assistance in preparing and filing income tax returns for income tax purposes are usually deductible by virtue of section 9. However, the fees for applying under the VDP should not, in our view, receive the same treatment, as they are not expenses that are part of the income-earning process of a business or property. These expenses are instead incurred to determine if the taxpayer is eligible for the VDP and with a view to regularizing the taxpayer’s tax situation.