CTF - 1990 Conference Report
QUESTION I-22
DEDUCTIBILITY OF EXPENSES OF NON-INCOME TAX OBJECTIONS AND APPEALS
Does Revenue Canada agree that a taxpayer is entitled to a deduction of expenses incurred in preparing and presenting an objection or appeal concerning an assessment related to provincial law that imposes a tax (other than income Tax), or to tax, interest or penalties under the Excise Tax Act?
ANSWER
In the determination of business or property income, legal, accounting and other similar expenses of representation, including expenses incurred in preparing and presenting an objection or appeal concerning a federal or provincial assessment, are generally deductible pursuant to the general provisions of the Act.
Paragraph 60(o) of the Act, on the other hand, is a specific provision, enacted to provide a deduction to all taxpayers, including those persons reporting income from sources other than business or property such as salaried employees. The wording of subparagraph 60(o)(i) of the Act limits the deductions to, "... amounts paid by the taxpayer in respect of fees or expense incurred in preparing, instituting or prosecuting an objection to, or and appeal in relation to,
(i) an assessment of tax, interest or penalties under this Act or and Act of a province that imposes a tax similar to the tax imposed under this Act, ...".
Under subparagraph 60(o)(i), the representation fees or expenses are only deductible when they are in respect to federal or provincial income tax assessments of tax, interest or penalties. Therefore, the expenses of non-income tax objections and appeals are not deductible by taxpayers who do not incur the expenses to earn income from business or property.
CTFNovember 1990Glen ThornleySection 23