No one enjoys paying taxes, and every year a few creative Canadians will try to push the boundaries and find a loophole. Not surprisingly, Canada Revenue Agency usually rejects these unusual deductions, but now and then, the courts will side with the taxpayer. Here are six Canadian examples of what worked and seven that didn't, provided by H&R Block Canada:
REJECTED: Haircuts
ACCEPTED: Additional food needed by couriers
The Federal Court of Appeal ruled that additional food required by a foot and transit courier because of the extra energy he expended could be claimed as a business expense. (Scott v. The Queen, 98 D.T.C. 6530)
REJECTED: Seized marijuana
ACCEPTED: Cat and dog food
While you can’t usually claim pet food, a farmer was allowed to claim cat and dog food because they were outdoor pets that were acquired to keep wildlife away from their blueberries. (Zeitz v. The Queen [2002] 4 C.T.C. 2292)
REJECTED: Trip to Las Vegas
ACCEPTED: Spousal amount for widows
REJECTED: Gambling as a business
A lawyer turned professional gambler had more than $100,000 in losses disallowed as a business expense because he could not prove he had an actual business plan. (Cohen v. The Queen [2011] TCC 262)
ACCEPTED: Golf is not a taxable benefit if you hate it
A Canadian executive successfully argued that the golf membership paid by his company was not a taxable benefit because he hated playing golf. (Rachfalowski v. The Queen [2008] TCC 258)
REJECTED: Ballet lessons
While the cost of your child’s ballet lessons does qualify for The Children’s Arts Credit, it can not be claimed as a child care expense. (Levine v. The Queen [1996] 2 C.T.C. 2147)
ACCEPTED: Diamonds are a girl’s best friend
A stripper was allowed to keep nearly $2-million in gifts from a happy customer, despite the fact that the CRA tried to argue they were income. The Tax Court ruled that they were indeed gifts. (Landry v. The Queen [2009] TCC 399)
REJECTED: Lost footballs
The cost charged to a professional football player for balls he threw into the stands can not be claimed as an expense against his employment income. (Ellis v. The Queen [1998] 4 C.T.C. 2373)
ACCEPTED: Gambling with no plan
REJECTED: Income Tax Act incomprehensible
Arguing that the Income Tax Act is difficult to understand is not a valid defense when charged with failing to file income tax returns. (R. v. Meikle [2003] 4 C.T.C. 294)
Editor's Note: This article has been updated to show that the court case about golf involved whether or not the membership was a taxable benefit, not an employment expense.