Other Employment Expenses (Québec)

Professional liability insurance premiums are deductible on both federal and Québec tax returns only if legally (mandated by provincial or territorial law to maintain professional standing) required to maintain professional status. Premiums must be personally paid and not reimbursed by the employer. The insurance must relate directly to the individual’s profession (e.g., accounting, law, medicine).

Federal tax return (CRA):

Line 21200 – “Annual union, professional, or like dues” on the T1 return. If Box 44 of the T4 slip includes liability premiums, the amount cannot be claimed again. Employer-paid premiums are nontaxable and not deductible.

Québec tax return (Revenu Québec):

Line 207 – “Deduction for Professional Liability Insurance.”

Legal Fees

Employees may deduct legal fees in limited cases, reduced by any reimbursement received.

Collecting salary or wages:

Legal fees paid to collect or establish a right to salary, wages, or wage-loss benefits are deductible federally and in Québec (claimed on line 207 of the TP-1). This includes fees related to severance or wrongful dismissal.

Retiring allowance or pension benefits:

Legal fees paid to collect or establish entitlement to a retiring allowance or pension benefit are deductible at both federal and Québec levels, up to the total amount received in the year. Québec rules mirror federal ones but include specific limits and carry-forward provisions.

Contesting a tax assessment:

Both CRA and Revenu Québec allow deductions for legal or accounting fees incurred to prepare, file, or appeal an objection to an income tax, CPP, EI, or QPP assessment.

Support Payments

• Recipient: Legal fees paid to collect overdue support, establish entitlement, or increase the amount of support payments are deductible.
• Payer: Legal fees incurred to establish, negotiate, or dispute support payment amounts are not deductible.

Repayment of a Salary, Wages or Wage Loss Replacement Benefits

When salary, wages, or wage-loss replacement benefits previously reported as income are repaid, a deduction may be claimed on both the federal (CRA) and Québec (Revenu Québec) tax returns. This applies when income was received for a period during which no duties were performed and later had to be repaid.

Deduction claim: Report the repayment on line 22900 of the federal T1 return and line 207 of the Québec TP-1 return. The deduction cannot exceed the income received for the period when no duties were performed.

Documentation: The employer must provide a letter confirming the repayment, including the reason, tax year, and amount. This documentation supports the deduction for both CRA and Revenu Québec. If an amended T4 or RL-1 slip is issued, the corrected amount will be reflected; otherwise, the deduction must be claimed directly on the return for the repayment year.

Non-capital loss: When the repayment exceeds total income, it may create a non-capital loss that can be carried back three years or forward twenty years to offset income federally and provincially.

Administrative considerations: Overpayments due to administrative errors may be corrected by the employer within three years through an amended T4/RL-1. When duties were not performed, the employer typically cannot adjust prior slips and must instead issue a repayment confirmation letter.