Professional Employee Legal Expenses

Ross v The Queen, 2016 TCC 170

At issue was whether expenses related to defending against complaints to a self-governing body with jurisdiction over the employee are deductible under s ITA paragraph 8(1)(b).

The Tax Court of Canada held that all of the amounts were not “legal expenses”, only the amount paid to defend against the complaints filed with the college were legal expenses. The amounts for examinations, travel to take examinations, and urine tests related to the investigation and its outcome are not legal expenses.

Even though a portion of the expenditures were legal expenses, it was nevertheless not deductible.  Paragraph 8(1)(b) is narrow in scope and allows an employee to deduct legal expenses incurred in attempting to collect unpaid salary or wages, or attempting to settle a dispute with an employer of former employer with respect to salary or wages due to the employee – Fenwick v The Queen, 2008 FCA 370.

In this case, legal expenses were incurred to be able to continue to practice a profession. Such expenses do not fall within the wording of 8(1)(b) – Blagdon v The Queen, 2003 FCA 269.

Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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