Significant legal and consulting fees related to a CCAA restructuring which involved debt restructuring. In response to a query as to whether, where "the indebtedness with respect to a specific creditor was terminated as a result of such restructuring process…such expenses can be considered to relate ‘solely to the year' and, therefore, be eligible for deduction pursuant to paragraph 20(1)(e.1)," CRA stated:
Paragraph 20(1)(e.1) of the Act provides that, notwithstanding paragraph 20(1)(e), certain financing expenses that relate only to the year they are incurred are deductible in that year. The fees deductible under paragraph 20(1)(e.1) include standby charges, guarantee fees, registrar fees, transfer agent fees, filing fees, service fees, or any similar fees, provided such fees are not:
- contingent or dependent upon the use or production from property;
- computed by reference to revenue, profit, cash flow, commodity price, or any other similar criterion; or
- computed by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation.
If the expenses listed in your submission fulfill the above-mentioned conditions, they may be eligible for deduction under paragraph 20(1)(e.1)….