In general terms, for legal expenses to be deductible, they must have been incurred to generate income, or be part of normal operating expenses and can not relate to the creation, amalgamation or termination of a business or the taking over of another business.

Expenses that can be claimed for tax purposes include:

  • Improving employment contracts
  • Fees for stamping and registering leases on property
  • Renewals of leases
  • Expenses that relate to registering, renewing (and defending) patents, renewal and defending trade marks, contracts and other commercially important information

Expenses that are not deductible include:

  • The costs of registering new trademarks
  • Acquisition of capital assets
  • Expenses incurred in the sale of a business
  • Forming, registering or liquidating a company

However, legal expenses incurred of under $10,000 are tax deductible in full.

Back to Tax Facts