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Legal fees can be a burden, but they're only tax deductible in certain circumstances

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“He who is his own lawyer has a fool for a client.”

While there is plenty of wisdom in this old adage, at the same time, I’ve yet to meet a client who enjoys paying for legal advice.

Though it cannot (and should not!) be avoided in many circumstances, legal representation and the fees that come with it can be a severe burden. While there are some tax remedies available, the tax deductibility of legal as well as other professional fees is not straightforward and depends on who is paying them and in what context.

For example, employees (or former employees) can claim legal fees they paid to collect or establish a right to salary or wages owed to them as well as to collect (or establish a right to) a retiring allowance or pension benefit. Business owners can generally deduct legal fees paid for the purpose of earning business income.

Legal fees are also tax deductible if you incur them to challenge a Canada Revenue Agency assessment, perhaps because the CRA has questioned your income, deductions, or credits for a particular tax year, or you decide to object to, or appeal, a tax assessment or decision.

Unfortunately, most other legal fees paid by individuals are simply not tax deductible. For example, the cost of preparing a will, suing your neighbour over their untrimmed hedges, or fees paid to your real estate lawyer for reviewing the lease agreement on your personal condo rental, are all not tax deductible.

In the realm of family law disputes, the question of tax deductibility comes up frequently. You cannot claim legal fees you incurred to get a separation or divorce or to establish custody of — or visitation arrangements for — a child; however, fees relating to support payments that your current (or former) spouse or common-law partner paid to you may be tax deductible.

A recent tax case, decided last week, involved a taxpayer who attempted to deduct $33,653 in legal, accounting and other professional fees he incurred to wind up his Individual Pension Plan (“IPP”) as a result of his divorce. An IPP is a defined-benefit registered pension plan set up for the owner (and, occasionally, their spouse) of a private corporation to provide enhanced retirement savings.

The taxpayer, a management consultant, had his corporation establish an IPP for him in 2003. In February 2013, as a result of the breakdown of his marriage, he was ordered by a Family Court judge to make an equalization payment to his spouse and pay lump sum spousal support. A month later, as a result of this court order, the taxpayer filed for bankruptcy.

In February 2015, his company was forced into bankruptcy, yet continued to operate until it was discharged from bankruptcy in May 2016 and was dissolved. In June 2016, the insolvency coordinator with the Financial Services Commission of Ontario appointed an administrator to wind up the taxpayer’s IPP.

In August 2016, a second court order stated that one-half of the amount accrued under the taxpayer’s IPP was to be transferred to his spouse, net of legal, accounting and professional fees that totalled the $33,653. All required distributions from the IPP were completed on Nov. 10, 2016.

The only issue in the tax case was whether the legal, accounting and other professional fees paid were tax deductible. The taxpayer took the position that the expenses claimed were legitimate business expenses related to the company and, more particularly, related to the administration of his IPP. He argued that, “they were incurred for the sole purpose of gaining or producing income from business or property.” He testified that the IPP had incurred expenses of this nature for “around 15 years and such had always been allowed as deductible business expenses.”

The CRA argued that the expenses were not incurred for the purpose of producing income from a business and that they were “personal in nature and were incurred only for the purpose of satisfying the Court Order requiring (the taxpayer) to wind up his IPP in order to effect equalization payments upon the dissolution of his marriage.”

The judge explained that legal, accounting and professional fees can ordinarily be deducted as business expenses when they are incurred in the normal course of a business’s income-earning operations or are incurred to defend those business activities. In this case, however, the judge noted that when the company and the IPP were wound up, the company was not carrying on any income-earning activities. In fact, the company was bankrupt and being dissolved, and the IPP was being wound up in order to satisfy a court order mandating the division of the IPP.

In other words, the judge felt that the legal, accounting and other professional fees were not paid for the purpose of earning income for the company, the IPP or the taxpayer, nor were they paid to defend their income earning activities. The judge acknowledged that while it may have been true that in the past that such fees were in fact deductible from income earned by the company or the IPP, that was when the company and the IPP were actively engaged in earning income. As the judge wrote, “The legal, accounting and other professional fees incurred … were simply too remote and unrelated to the company’s and the IPP’s income-earning activities in order to qualify as valid tax deductions.”

Finally, even if it could be said that there was a business purpose to the professional fees paid, there is a specific rule in the Tax Act that states that legal expenses related to the division or settlement of a pension plan arising out of the breakdown of a marriage are specifically not deductible.

As the judge concluded, “The marriage breakdown entailed certain legal consequences such as the equalization of assets. It very often happens that a spouse’s pension plan has to be shared on the breakdown of a marriage. Therefore, even if (the taxpayer) was not a business man, he still would have had to share family assets, including any pension plans, with his spouse and therefore it is very likely that he would still have had to pay the fees associated with the winding up of the IPP.”

Jamie.Golombek@cibc.com

Jamie Golombek, CPA, CA, CFP, CLU, TEP is the Managing Director, Tax & Estate Planning with CIBC Private Wealth Management in Toronto.

 



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BBVA $250 Bank Bonus: $200 Checking + $50 Savings

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Offer extended to August 21st. BBVA has a new $250 bonus promotion, with a $200 bonus for opening an Online Checking account and receiving a qualifying direct deposit of $500+ by October 31, 2020. Get an additional $50 bonus by adding an Online Savings account and having a savings balance of at least $1,000 on October 31, 2020. If you want the $250 bonus, be sure to click on the “Open Both Now” button on the promotion landing page. Offer good for checking and savings accounts opened between July 24 – August 21, 2020. Checking account bonus details:

Eligible accounts include BBVA Online Checking and BBVA Easy Checking (Easy Checking available in AL, AZ, CA, CO, FL, NM, and TX only). Account must be opened online by clicking either the “Open Checking Now” or “Open Bundle Now” button above.

Online Checking account details:

  • Minimum opening deposit is $25.
  • No monthly service charge.
  • No ATM fees nationwide at more than 64,000 AllPoint®, participating 7-Eleven® and BBVA USA ATMs.
  • You will automatically receive a paper account statement by mail for a fee of $3 per month. However, you can opt for free electronic account statements and eliminate the $3 Paper Statement Fee when you turn off paper statements through Online Banking. Don’t forget to opt out!

Savings account bonus details:

You must meet stipulations for the $200 Checking Bonus to be eligible for the $50 Savings Bonus. The Online Savings account must be opened at the same time as the checking account through this landing page using the “Open Both Now Button”.

Online Savings account details:

  • Minimum opening deposit is $25.
  • No monthly service charge.
  • Currently interest rate is 0.05% APY.
  • You will automatically receive a paper account statement by mail for a fee of $3 per month. However, you can opt for free electronic account statements and eliminate the $3 Paper Statement Fee when you turn off paper statements through Online Banking. Don’t forget to opt out!

Additional bonus details:

  • We reserve the right to deduct the bonus amount if the account is closed within 12 months of opening.
  • The BBVA Online savings account holder must be an account holder on the new BBVA consumer checking account.
  • You must be a new BBVA savings customer who has not had a BBVA consumer savings account in the past 12 months or closed due to negative balance.
  • The cash bonus(es) will be deposited into the new checking account within 90 days of meeting the bonus requirements described above.
  • Accounts must be open and in good standing with a balance greater than or equal to $0.00 at the time of payment in order to receive the new account bonus(es).
  • These bonuses are not combinable with other BBVA Direct Deposit or Savings Account cash bonus promotions, and you may not have received a Direct Deposit or Savings Account Bonus in the past 24 months.



“The editorial content here is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone. This email may contain links through which we are compensated when you click on or are approved for offers.”

BBVA $250 Bank Bonus: $200 Checking + $50 Savings from My Money Blog.


Copyright © 2019 MyMoneyBlog.com. All Rights Reserved. Do not re-syndicate without permission.



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How to Download and Print ePAN Card Online

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हिन्दी में पढ़ें

PAN or Permanent Account Number is a unique 10-digit alphanumeric code issued to each and every entity carrying out financial transactions in India. Be it an individual or an organisation, PAN is mandatory for all tax-paying entities. One can apply for a PAN through NSDL website or UTIITSL portal for PAN. PAN hardcopy is can be received on the address mentioned in the Form 49A within 45 days of application. One can, however, download the ePAN online and use it as a valid document everywhere.

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What is ePAN?

ePAN is a virtual PAN card that contains the card holder’s PAN details. It can be downloaded either from the NSDL portal or the UTIITSL portal. It contains the card holder’s PAN and can be used for all e-verification that require PAN card to be furnished.

ePAN Card

Following details are mentioned in an ePAN card:

  • Permanent Account Number
  • Name
  • Father’s Name
  • Date of Birth
  • Gender
  • Photograph
  • Signature
  • QR Code

It is worth mentioning that it is illegal to possess more than one PAN card. A person found in possession of more than one PAN card is liable to be imposed a fine of up to Rs. 10,000.

Steps to Download ePAN Online

ePAN can be downloaded online from NSDL and UTIITSL portal. Those applicants who had applied for PAN through the NSDL portal in the past can download ePAN from the same. If they want to download the ePAN from UTIITSL portal, they will have to apply for PAN card reprint through the UTIITSL portal first otherwise they will not be able to download the ePAN. The same goes with the applicants of UTIITSL portal.

ePAN can be downloaded free of cost by all new applicants or applicants who have applied for a modification in the PAN data within one month of the issuance of PAN. UTIITSL charges an additional fee of Rs. 8.26 (including taxes) for every download request. This payment can be done online and the applicant can download the ePAN whenever he needs it.

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How to Download ePAN from NSDL Portal?

There are two options for downloading the ePAN through NSDL portal:

NSDL does not allow users to download ePAN after one month of application, be it for a new PAN card or corrections/modifications in PAN card.

Applicants can opt out from the delivery of the PAN card hardcopy and apply only for ePAN at the time of filling the form, both new and correction. In such cases, it is mandatory to quote the email address where the ePAN will be delivered.

How to Download ePAN by Acknowledgement Number?

One can download ePAN from the NSDL portal by following the steps mentioned below:

  • Visit NSDL PAN portal to download PAN card by Acknowledgement numberDownload ePAN card by Acknowledgement number
  • Enter the Acknowledgement number issued after submitting the PAN card application and click on “Generate OTP”

    NSDL ePAN Generate OTP
  • Enter the OTP and click on the “Validate” button to download your ePANNSDL ePAN Enter OTP
  • Click on “Download PDF” to download the ePAN instantlyDownload ePAN PDF

How to Download ePAN by PAN and Date of Birth?

One can download the ePAN card by mentioning the PAN and date of birth as well. Following steps should be followed for the same:

  • Visit the ePAN downloading portalDownload ePAN by PAN and DOB
  • Enter details required in the form such as PAN, Date of Birth, GSTN (optional)
  • Now mention the security code and click on “Submit” to download the ePAN card for free

How to Download ePAN from UTIITSL Portal?

UTIITSL is an alternative portal from where applicants can apply for new PAN cards or making corrections in the existing PAN. Applicants who have applied through UTIITSL can download the ePAN online. If the ePAN is downloaded within 30 days of issuance of the PAN card, no additional fee is charged.

One can download the ePAN from the UTIITSL portal by following the steps mentioned below:

  • Visit the ePAN downloading portal of UTIITSLePAN Download at UTIITSL
  • Enter the required details such as PAN, date of birth/incorporation, GSTIN (optional) and security code and submit the application
  • Check whether the mobile number and e-mail ID mentioned against the PAN is correct and enter the security code and tick the declarationDownload ePAN UTIITSL
  • The user gets the option to send the OTP to either mobile number, email ID or both
  • An OTP is sent to the selected source
  • Enter the OTP and click on submit
  • In case the PAN issuance period is more than one month, the user will be directed to make an online payment of Rs. 8.26
  • On successful processing, the user will be able to download the ePAN online.
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FAQs on Downloading ePAN Card

Q. How to download my old PAN card by the PAN Number?

Ans. You can download your old PAN Card by availing the facility of duplicate PAN Card download through ‘Reprint PAN Card’ option provided by the Income Tax Department of India from either NSDL or UTITTSL Portal.

Q. I lost my PAN Card, but I remember my PAN Card Number. Can I download a copy from the Internet and from which website?

Ans. Yes, in case you have lost your PAN Card and you remember your PAN Card Number, you can download PAN Card soft copy from the official website of either NSDL or UTIITSL. However, e-PAN Card download by coupon number can be done via UTIITSL Portal and duplicate PAN Card download by acknowledgement number can be done through NSDL Portal.

Q. How can I reprint my PAN Card?

Ans. To reprint your PAN Card, you need to visit the official website of TIN-NSDL for old PAN Card download by applying for duplicate PAN Card download. To know the process in detail, click here.

Q. How to download an e-PAN Card without a PAN Number?

Ans. To download an e-PAN without a PAN Number, a duplicate PAN Card download can be done through the ‘Know your PAN’ facility from the official website of Income Tax Department i.e. www.incometaxindia.gov.in

Q. Is there any facility to download e-PAN Card without Acknowledgement Number?

Ans. Yes, you can download e-PAN Card without Acknowledgement Number by entering your PAN Number, Aadhaar Number (only for Individuals) and other details like Date of Birth, GSTIN (optional) and you have applied for e-PAN for more than 30 days through NSDL e-Governance and / or e-filing portal of Income Tax Department.

Q. Is there any PAN card download app?
A. No, there is no PAN card download app. One has to either visit NSDL website or UTI Infrastructure Technology And Services Limited website to download ePAN.

Q. What is the fee charged for downloading ePAN card?
A. An applicant can download the ePAN card for free for the first month of issuance of the new/modified PAN card. After that, UTIITSL applicants will have to pay a fee of Rs. 8.26 for each ePAN card download.

Q. Is ePAN a valid document?
A. ePAN is equally valid as a regular PAN card. Both are the same documents and are just issued through different media.

The post How to Download and Print ePAN Card Online appeared first on Compare & Apply Loans & Credit Cards in India- Paisabazaar.com.



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How To Stick To A Budget (10 Budgeting Tips & Tricks)

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(The following is a transcription from a video Linda and I recorded. Please excuse any typos or errors.)

All right. Today, we’re talking about 10 incredibly useful hacks to stick with your budgets. And, I’m really excited to share them with you.

We have really honed in on what it takes to have a budget that you can enjoy, that makes you feel good about life.

We’ve done it wrong so much that we’ve just learned how to do it right, and how to have fun in the process.

If you haven’t gotten Our Free Budgeting Worksheet, I’ve spent a lot of time making this thing and I think it’s awesome.

It’s a good first step to see how your income and expenses stack up. It’s just a good way to get started with your budget.

You can just pick that up by clicking here, and you’ll be on your way to starting your budget!

get started budgeting with a free budgeting worksheet

Now let’s get to these 10 amazing hacks to help you stick with your budget…

10. Make Savings Automatic

Bob: One of the biggest mistakes that most people make is they spend their money and then they try to save or give afterwards. You have to do it the opposite way, the things that are most important to you: giving money, savings, whatever those are, that needs to come first. If you don’t do it that way, if you don’t have some automatic thing in place, the reality is, we all know this.

Linda: It’s not going to happen.

Bob: We all know this, it’s probably not going to happen. You’re going to get to the end of the month, there’s not anything there. And so, that’s why making it automatic is incredibly important.

9. Reward Yourself

Bob: Or if you’re a Parks and Recreation fan, we could call it, treat yo self.

Linda: Treat yo self. This comes across though, as like, “I’m just going to treat myself all the time,” which is something I would do, but we’re not talking about that. Right?

Bob: Yeah. But the key in terms of sticking to your budget, you need rewards. You need incentives to stay the course. And so, yeah, when we were paying off our debt, this was a big part of that. Our budget was a big piece of us being able to pay off our debt. But in order to reach that goal, we had to have milestones. It was too big of a thing, it was too much, it was too long of a road for us to walk without some rewards. And so, we made sure to keep them in there and because we did, we were able to stick with it. Right?

Linda: Yeah. And I think this was especially key for me because he was watching the numbers of our debt go down, down, down. And he was really, really involved. But for me, I was more on the sidelines. And if I wouldn’t have had this incentive, it would have been really difficult for me to keep going. I think I would have just gotten discouraged and given up. So, I think this was extremely key for me since I was not as involved.

Bob: Yeah. Definitely.

8. Budget With Accountability

Bob: I’ve had the unique advantage of being able to try out and test out a whole bunch of different budgeting methods, budgeting softwares and tools and spreadsheets, and all this stuff over the years. I’ve been a financial blogger for almost 13 years, and I have reviewed almost everything out there, and I’ve tried out so much of the stuff. Because we’ve actually tried it ourselves.

The thing that I’ve come to realize is that most budgeting methods don’t actually hold you accountable. There’s this false sense of accountability. And so, the only tool that I’m aware of that ever actually hold you accountable are cash envelopes, if you do that and put cash in envelopes and do that type of budgeting.

Linda: Yeah. And that wasn’t going to work for us because we use plastic sometimes because we online shop or whatever.

Bob: Yeah. Then the other option is The Real Money Method. And this is kind of our hack to do that, to have a budgeting method that actually holds you accountable. So, we have an entire course teaching this method in which you’re welcome to check out if you’re interested. But the bottom line is that for most of us to stick with a budget, we need accountability. We need a budget that’ll hold us accountable. And so, if you’ve ever failed with budgeting, this might be the reason why. So, just find something that will hold you accountable.

7. Don’t Save Your Credit Card Info On Any Site Where You Shop

Bob: This is a good hack. This, yeah, because adding that friction, I think that would definitely, yeah. It just doesn’t seem like much, but having to spend the extra minute or two to go through with the purchase to type all that in, it just slows you down.

Linda: All right. So, I think you’ve told me about this before, where there’s something almost physical that happens in your body when you pay for something and you have to hand over cash.

Bob: Because it’s just real money and you get to feel it.

Linda: Yeah. And you’re like, “There’s my money and it’s leaving.”

Bob: It’s disappearing, yeah.

Linda: But when you write a check, you told me it’s less, but it’s still more of a process that you still feel like…

Bob: A little bit less real, yeah.

Linda: And then, less when you are swiping your credit card.

Bob: Yeah.

Linda: I think you told me this years ago, really before online shopping was as big as it is now. And I can only imagine how little you feel that when it’s like click, click, and it’s, “I bought it.”

Bob: Yeah.

Linda: It’s done.

Bob: I mean, that’s what Amazon has done. It’s like literally-

Linda: Oh, my gosh.

Bob: Add To Cart, boom. Done.

Linda: Well, and you can even hit Buy It Now. And it’s like click, you’re done.

Bob: Yeah. You’re right. It’s one click. So, it’s brilliant on their part. But the point is, is that adding that friction will overall reduce the spending that we make. So yeah, it’s an important move to make.

6. Only Use Gift Cards To Shop On Amazon

Linda: Number six ties right into what we were just talking about. Only use gift cards to shop on Amazon.

Bob: This is an interesting idea that the author had to basically go to the grocery store, buy an Amazon gift card for $100 or whatever, and then load that on your account and then make purchases with that. And so, this kind of takes that friction to a whole new level in that you need to go to the store and buy an Amazon gift card. But at the same time, it kind of undoes the previous thing we were just talking about because the gift card is loaded in there and it’s still pretty easy to buy. So, it’s kind of like, yeah, I don’t know. It might work for some people, but something to consider.

5. Never Buy Anything That You Put In An Online Shopping Cart Until The Next Day

Linda: Number five, never buy anything that you put in an online shopping cart until the next day.

Bob: This is a good idea. I can’t tell you how many times I’m struggling with some annoying problem around the house and I need to go buy this. I’m like, “I need to go buy this thing to fix it,” whatever it is. And I’ll put the thing in a cart and just because I forget to go buy it and I’ll come back a couple of days later, I’m like, I actually solved that problem already. Or it’s not even that big of a problem. It seemed like a big problem in the moment, but it really isn’t that big of a problem. And it is amazing. We’ve all heard this, just sit on a purchase for a little bit and then, half the time, you don’t want to make it later on. But I like this idea of throwing it in the cart. That way, you won’t forget about it. And you can check in a couple of days.

Linda: Yeah.

Bob: And see.

Linda: Well, and I think this is really key for stuff that you just want.

Bob: Yeah, especially.

Linda: Because I mean, so many times, you’re just trying to numb yourself. You’re like, “I’ve had a bad day, so I’m going to go online shop.” And I know that’s what I do. So, just sitting on that, having it in your cart kind of gives you a little bit of satisfaction, and then being able to sit on it for a little bit, I think really helps. And then you can make a decision when you’re a little bit more clearheaded.

Bob: Yeah.

4. Read The One-Star Reviews For The Products Before You Buy Them

Linda: Okay, I really like this one. Read the one-star reviews for the products before you buy them.

Bob: This is a great idea. Because it definitely gives you a whole different perspective on the product.

Linda: Yeah.

Bob: And yeah, and you just might not be as interested when you see all the negative things about it.

Linda: Right.

Bob: Now, I do this for really, most products I buy, because I want to see what people are saying the bad is.

Linda: Yeah. You don’t want to buy a product that’s going to be terrible and it’s not what you want.

Bob: Well, yeah, if you have 20 people in a row saying that whatever, “it stopped working after three months,” it’s like, all right, there might be a trend here. So, just from a smart shopping perspective, I think this is good, but it also will help you. Yeah, I think it will deter you from buying more things if you’re looking at the bad.

3. Don’t Go To The Grocery Store Hungry

Linda: All right. Number three, this one is classic.

Bob: But it works. It works.

Linda: Don’t go to the grocery store hungry.

Bob: Yeah. It just really, really works. It’s such a big difference when you, yeah, when you’re…

Linda: When you’re full and you’re not hungry.

Bob: Yeah.

Linda: You should go to the grocery store only full. It’s where you’re just like, “None of this sounds good.”

Bob: No, this is what you should do. You should go to the grocery store after a Thanksgiving meal, when you’re so bloated and just be like, “I don’t want any food.” You’re tired. That’s when you go to the grocery store.

Linda: You won’t be buying much. But then, you’ll regret it later because you’ll be like, “Why is there no food in the house?”

2. Only Make Major Purchases In The Morning

Linda: Number two, only make major purchases in the morning.

Bob: Yeah. I think this is really interesting. I remember, I think Tim Ferriss was talking about decision fatigue, and this idea that we only have a limited number of decisions that we can make any given day. And after that point, we’re just tapped out and we can’t actually make any more decisions.

Linda: Yeah.

Bob: And so, what happens is, so many of us in busy lives, we get to the end of the day and we’re just worn down and we don’t have good decision-making abilities. Whereas at the beginning of the day, we’re fresher. And we have, if you think of it in terms of a bank account, we have a lot more decisions sitting there that we can tap into. So, making these purchases, especially big purchases in the morning when we’re stronger, it’s just a better approach.

1. Choose A Major Category Each Month To Attack

Linda: Okay. Number one, choose a major category each month to attack.

Bob: I think this is a good idea. I think too many people try to solve 10 problems at once. And I think focusing your energy on just one, find one category in your budget that you’re struggling with, even though you might be struggling with four or five of them, find one, focus your energy on solving that particular one, whatever that is. If it’s groceries, if it’s household goods, whatever that category is, try to solve that one.

Linda: Yeah. And we’ve talked about this before, where you should not base your budget around what your personal goals are. You need to base it around where you actually are in your life. So, if you were going to Starbucks every day and you want to change that, do that one month. And then, once you’ve got that down, work on the next habit. Don’t try and do it all at once, because you’re going to blow your budget. It’s not going to work. And you’re just going to be mad.

What Budgeting Tip Would You Add To This List?

Yeah. So, those are our top 10. I’d love to hear yours in the comments.

Don’t Forget The Free Budgeting Worksheet!

Like I mentioned at the beginning, if you are new to budgeting, or if you just need a little help, be sure to get our free budgeting worksheet.

Source article that inspired this video/article: 13 incredibly useful budgeting hacks to help you stick to your budget.



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