Regarding the deductibility of legal fees incurred in defending in court against various fines and penalties, other than those prescribed, the Directorate noted that s. 67.6 “does not prevent the deduction of legal fees” and noted that, in accordance with 65302 British Columbia, reasonable legal fees incurred for an income-producing purpose are deductible, subject to a qualification:
[I]f an offence is so egregious or repugnant that the fine or penalty subsequently imposed cannot be justified as having been incurred for the purpose of earning income, we may also conclude that the legal fees associated with it were not incurred for the purpose of earning income from business or property and are not deductible by virtue of paragraph 18(1)(a).