Professional Fees on Your T2125
Accountant fees, legal costs, and tax preparation are all deductible on Line 8860.
What You Can (and Can't) Deduct
Know exactly what belongs on Line 8860 — and what the CRA says doesn't qualify.
What Qualifies
- Accounting and bookkeeping fees
- Legal fees related to your business operations
- Tax return preparation fees, consulting fees, and fees for filing objections or appeals
Does NOT Qualify
- Legal fees for acquiring capital property (added to the cost base for CCA)
- Personal legal fees unrelated to your business
- Legal fees for buying or selling your home (personal capital property)
Rules & Limits
Special CRA rules and percentage limits that apply to professional fees (legal & accounting).
Special Rules
Legal Fees for Capital Property Acquisition
Heads upIf you pay legal fees to acquire a capital asset (e.g., a building), those fees are added to the cost of the asset and depreciated through CCA, not deducted as a current expense.
Real-World Examples
See how different professionals use Line 8860 deductions in practice.
Annual Accountant Fees
Paid an accountant for annual T1/T2125 tax preparation and quarterly bookkeeping support.
$1,200
$1,200 (100%)
Business Legal Consultation
Consulted a lawyer about a commercial lease agreement for a new salon location.
$500
$500 (100%)
Common Mistakes to Avoid
These errors on Line 8860 can trigger a CRA review — here's how to get it right.
Not deducting tax software subscriptions
Tax preparation software (e.g., TurboTax, Wealthsimple Tax Pro) used for your business return is a deductible professional fee on Line 8860.
Putting platform fees here instead of Line 8871
Platform fees (Uber, DoorDash, Shopify) are operational/admin costs that belong on Line 8871 (Management & Administration Fees), not Line 8860.
Commonly Confused Categories
These categories are often mixed up with Professional Fees (Legal & Accounting). Here's the difference.
Sample Receipt Walkthrough
See how ScanForTax processes a typical professional fees expense.
Smith & Associates CPA
2025-04-05
Ontario
How ScanForTax categorizes this
ScanForTax identifies this CPA invoice and auto-categorizes it under Professional Fees (Line 8860). The $110.50 HST is flagged as fully recoverable through your ITC claim.
Frequently Asked Questions
Can I deduct the cost of tax preparation software?
What is the difference between professional fees (8860) and management fees (8871)?
Related Professions
Profession-specific guides that frequently use Professional Fees deductions.
Tax Guides by Province
See how tax recovery works for professional fees expenses in each province.
Related Expense Categories
Tax deadline is April 30th.
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