The CRA denied the deduction of the fees, taking the position that they were capital expenses (and thus not deductible in the year they were incurred) rather than current expenses. Upon appeal to the Tax Court of Canada, the judge disagreed with the CRA. The judge held that the expenses were ordinary expenses incurred with respect to the day- to-day management of the property. The fees were therefore current expenses, fully deductible in the year they were incurred.
This letter summarizes recent tax developments and tax planning opportunities; however, we recommend that you consult with an expert before embarking on any of the suggestions contained in this letter, which are appropriate to your own specific requirements.