Tax Court of Canada


Income tax

Business and property income

Continuing services provided by taxpayer were referable and connected to income earned in previous years

Retired member of Nova Scotia Barristers Society, taxpayer acquired files through 27 years of practicing law and, one year before she retired, moved client files to storage facility. Taxpayer deducted professional dues of $57.00 and certain file storage fees of $1,200.00 as expenses during 2015 taxation year. Minister of National Revenue allowed annual dues but disallowed file storage fees. Taxpayer appealed. Appeal allowed. Society’s members were insured against professional liability risk through insurance association which recommended that client files be retained, depending on type, for 3 to 25 years and there were elaborate and precise directives for files which may be scanned, may be destroyed and must be kept indefinitely. During years of providing legal services, taxpayer was accruing annually “run off” responsibilities concerning file retention, accessibility and future storage obligations. Taxpayer incurred requirement to expend future sums on storage to earn then current income. In addition, taxpayer was incurring run off professional responsibilities and future risk as sole practitioner. Both past accrual of future record keeping services, file storage and need to protect presently her insurance coverage for past legal services all represented enduring and current provision of legal services beyond temporal period in which income was received. Continuing services provided by taxpayer in 2015 were referable and connected to income earned in previous years.

Tournier v. The Queen (2018), 2018 CarswellNat 7014, 2018 CarswellNat 7435, 2018 TCC 229, 2018 CCI 229, Randall S. Bocock J. (T.C.C. [Informal Procedure]).

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