Although there is no legislation providing for the payment of support between common-law partners in the event of separation, Mr. X and Ms. X (Quebec residents) negotiated an agreement under which Mr. X will pay support to Ms. X (the "Agreement"), with the Agreement being approved by the Court. Are the legal costs incurred by each for the negotiation and conclusion of the Agreement deductible? CRA responded:
In … IT-99R5 … the CRA confirms that legal costs incurred to enforce pre-existing rights to interim or permanent support amounts are deductible. A pre-existing right to a support amount can arise from a written agreement, a court order or legislation such as sections 11 and 15.1 of the Divorce Act with respect to child support, or Part III of the Family Law Act of Ontario. As a result of … Gallien v. The Queen … 2000 DTC 2514 … legal costs incurred to obtain spousal support pursuant to the Divorce Act, or under provincial legislation in the case of a separation agreement, are also deductible.
However, in the case of common-law spouses, the legal costs incurred to negotiate either a … cohabitation contract or a separation agreement are for the establishment and negotiation of an entitlement to support. At that level, it is the CRA's position that the legal costs would not be deductible to either Mr. X or Ms. X.