The Canada Revenue Agency\u0027s reasoning for denying one taxpayer\u0027s headhunter expenses were \u0022nonsensical,\u0022 a judge said. Find out more.
, Declaration of Conditions of Employment, on which your employer has certified you were required to pay various types of expenses for which you will not be reimbursed.Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails or any newsletter.
In 2015 and 2016, the adviser reported commission income on her tax returns of $538,388 and $527,077, respectively, and deducted employment expenses of $31,051 in 2015, and $39,435 in 2016.Article contentThe CRA allowed the majority of her employment expenses, including promotional, motor vehicle and travel expenses, but it denied costs she paid to a headhunter to help find an appropriate associate adviser to join her practice. Specifically, the CRA denied $11,112 in 2015 and $10,606 in 2016.
At that time, she concluded that if she wanted to achieve the performance expected by her firm, she needed to hire an associate adviser who could share her duties and canvass for new clients. This was confirmed by her brokerage branch manager, who testified that when an adviser’s clientele becomes larger, it can be difficult to ensure the quality of services, and that in these cases the firm suggests senior advisers hire associates.
The CRA denied the adviser’s cost to hire the search firm, arguing the taxpayer wasn’t explicitly required under her employment contract to pay the headhunter expense. The CRA said the taxpayer should have gone through the internal recruitment process and selected someone from that list rather than using her own headhunter.Article content
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'Nonsensical': CRA denies taxpayer's headhunter fees, but judge sees things differentlyThe Canada Revenue Agency\u0027s reasoning for denying one taxpayer\u0027s headhunter expenses were \u0022nonsensical,\u0022 a judge said. Find out more.
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