Law firm can’t deduct wedding costs as a business expense, Quebec court finds

MONTREAL — A Quebec judge has ruled against a law firm that tried to deduct the cost of a lavish wedding for the daughter of one of its partners as a business expense.

Judge Daniel Bourgeois of Quebec court ruled last month that the firm Spiegel Sohmer could not write off the $75,000 it reimbursed to lawyer Robert Raich and that Raich needs to pay taxes on the amount as a benefit.

The decision states that Raich, a tax lawyer, had argued that he’d thrown the sumptuous Montreal wedding party for his daughter Jacqueline in part to strengthen ties with the firm’s clients. His daughter testified that she hardly knew or didn’t know at all the business associates invited by her father.

“The marriage took place in Montreal because, (Raich) said, he wanted mainly to promote the interests of Spiegel Sohmer and demonstrate his appreciation to his clients and business associates,” the Jan. 15 decision said, noting that the daughter and her groom lived in the United States.

Raich claimed nearly half the cost of the $169,000 wedding on a firm expense account, reasoning that 97 of the 218 guests were his clients or business associates. The firm reimbursed him the $75,242 he sought, and claimed the amount on its 2012 tax filing.

Revenue Quebec took issue with the deduction and refused it on the basis that a wedding is clearly personal in nature. 

Bourgeois agreed, noting that family events are generally considered to be personal, and that Raich failed to provide convincing evidence to prove the wedding was an exception.

“Despite the audacity displayed by Mr. Raich during his testimony, he did not in any way affect the presumption of validity of the assessments issued by Revenue Quebec,” the judgment read.

Furthermore, nobody from Spiegel Sohmer testified at trial to support the lawyer’s claims or prove the event represented a significant business opportunity, indicating a “certain lack of interest” in their former managing partner’s tax challenge, Bourgeois wrote.

His decision upheld the revenue agency’s tax assessment for the firm, as well as the decision to consider the reimbursement as a taxable benefit to Raich.

This report by The Canadian Press was first published Feb. 18, 2021

Morgan Lowrie, The Canadian Press