Kruivitsky – Tax Court of Canada finds that s. 60(o)(i) does not permit a deduction for costs of another’s tax dispute and that tax dispute costs are deductible from related business income

The taxpayer represented a relative in his objection to the CRA and appeal to the Tax Court, and paid approximately $6,200 in fees and disbursements for his appeal to the Federal Court of Appeal.

Before finding that the taxpayer could not deduct such expenses pursuant to s. 60(o)(i) in computing her income, Ezri J first indicated that the actual text of s. 60(o)(i) did not limit the deduction to an expense of the taxpayer whose assessment was disputed. However, the context suggested that Parliament has expressly so stated when it permitted a deduction to be taken by a taxpayer for others’ affairs, for example, transfers to parents of tuition tax credits or to spouses of charitable donation credits.

Furthermore, interpreting the provision as permitting the deduction by someone other than the one assessed would create an anomalous mismatch with s. 56(1)(l). For example, if the taxpayer had been awarded costs on the appeal to the Federal Court of Appeal, such an award would have been included in the income of her relative under s. 56(1)(l), even with her having taken the deduction under s. 60(o)(i).

Ezri J also indicated that, absent s. 60(o)(i), “[p]ersons earning income from business or property could deduct the costs in computing income in the usual way, pursuant to Premium Iron Ores”.

Neal Armstrong. Summaries of Kruivitsky v. The King, 2026 TCC 141 under s. 60(o)(i) and s. 18(1)(a) – legal fees.