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Docket: 2001-1662(IT)I |
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BETWEEN: |
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JAMES ATKINSON, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
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Appeal heard on November 17, 2003 at Toronto, Ontario
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Before: The Honourable Justice L.M. Little |
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Appearances: |
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For the Appellant: |
The Appellant himself |
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Counsel for the Respondent: |
Edward Park |
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JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 1998 taxation year is allowed, without costs, and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Signed at Vancouver, British Columbia, this 30th day of June 2004.
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"L.M. Little" |
Little J.
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Citation: 2004TCC445 |
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Date: 20040630 |
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Docket: 2001-1662(IT)I |
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BETWEEN: |
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JAMES ATKINSON, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
REASONS FOR JUDGMENT
Little J.
A. Statement of Facts:
[1] The Appellant was employed by the City of Toronto as a Policeman.
[2] Criminal charges were laid against the Appellant in connection with his activities as a Policeman.
[3] The Appellant retained a lawyer to defend his position against the criminal charges.
[4] The Appellant was successful in defending the false allegations that had been made against him.
[5] The Appellant paid legal fees of $32,226.49 to his counsel in defending his position.
[6] The Appellant deducted legal fees of $32,226.49 when he filed his income tax return for the 1998 taxation year.
[7] The Minister of National Revenue (the "Minister") disallowed the legal fees that were claimed by the Appellant.
B. Issue:
[8] Is the Appellant allowed to deduct legal fees in the amount of $32,226.49 in determining his income for the 1998 taxation year?
C. Analysis:
[9] The Appellant testified that if he had not successfully defended his position against the groundless criminal charges that had been made against him he would have lost his position as a Policeman and he would have lost his right to receive a pension from the City of Toronto (see Exhibit A-3).
[10] I accept the Appellant's testimony to the effect that the Appellant would have lost his right to receive a pension if he had not defended himself against the false allegations.
[11] Subsection 60(o.1) of the Income Tax Act (the "Act") reads as follows:
(o.1) the amount, if any, by which the lesser of
(i) the total of all legal expenses (other than those relating to a division or settlement of property arising out of, or on a breakdown of, a marriage or common-law partnership) paid by the taxpayer in the year or in any of the 7 preceding taxation years to collect or establish a right to an amount of
(A) a benefit under a pension fund or plan (other than a benefit under the Canada Pension Plan or a provincial pension plan as defined in section 3 of that Act) in respect of the employment of the taxpayer or a deceased individual of whom the taxpayer was a dependant, relation or legal representative, or
(B) a retiring allowance of the taxpayer or a deceased individual of whom the taxpayer was a dependant, relation or legal representative, and
(ii) the amount, if any, by which the total of all amounts each of which is
(A) an amount described in clause (i)(A) or (B)
(I) that is received after 1985,
(II) in respect of which legal expenses described in subparagraph (i) were paid, and
(III) that is included in computing the income of the taxpayer for the year or a preceding taxation year, or
(B) an amount included in computing the income of the taxpayer under paragraph 56(1)(l.1) for the year or a preceding taxation year,
exceeds the total of all amounts each of which is an amount deducted under paragraph (j), (j.01), (j.1) or (j.2) in computing the income of the taxpayer for the year or a preceding taxation year, to the extent that the amount may reasonably be considered to have been deductible as a consequence of the receipt of an amount referred to in clause (A),
exceeds
(iii) the portion of the total described in subparagraph (i) in respect of the taxpayer that may reasonably be considered to have been deductible under this paragraph in computing the income of the taxpayer for a preceding taxation year;
[12] It will be noted that subsection 60(o.1) provides that a taxpayer may deduct legal expenses paid to collect or establish a right to a pension. In this situation by defending himself against the groundless criminal charges laid against him, the Appellant established his right to receive a pension under the pensions provided for policemen employed by the City of Toronto.
[13] I have concluded that the Appellant is entitled to deduct legal fees in the amount of $32,226.49 by virtue of subsection 60(o.1) of the Act.
[14] The appeal is allowed, without costs.
Signed at Vancouver, British Columbia, this 30th day of June 2004.
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"L.M. Little" |
Little J.
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CITATION: |
2004TCC445 |
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COURT FILE NO.: |
2001-1662(IT)I |
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STYLE OF CAUSE: |
James Atkinson and Her Majesty the Queen |
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PLACE OF HEARING: |
Toronto, Ontario |
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DATE OF HEARING: |
November 17, 2003 |
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REASONS FOR JUDGMENT BY: |
The Honourable Justice L.M. Little |
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DATE OF JUDGMENT: |
June 30, 2004 |
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APPEARANCES: |
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For the Appellant: |
The Appellant himself |
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Counsel for the Respondent: |
Edward Park |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
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Firm: |
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |