Court
File No. 2006‑614(IT)I
TAX
COURT OF CANADA
BETWEEN:
JAMES
D. GRAY
Appellant
‑
and ‑
HER
MAJESTY THE QUEEN
Respondent
* * * * *
HEARD BEFORE MR. JUSTICE PARIS
in the Courts Administration
Service, Courtroom "C",
180 Queen Street West,
Toronto, Ontario
on Thursday, January 18, 2007
at 9:37 a.m.
* * * * *
APPEARANCES:
James Gray Self-represented
Josh Hunter For
the Respondent
Also present:
William O'Brien Court
registrar
Linda O'Brien Court
reporter
A.S.A.P. Reporting Services
Inc. 8 (2007)
200 Elgin
Street, Suite 1004 130 King Street West, Suite 1800
Ottawa,
Ontario K2P 1L5 Toronto, Ontario M5H 1E3
(613)
564-2727 (416) 861-8720
8
JUSTICE PARIS: These are the
reasons for judgement in the appeal of James Gray v. The Queen, 2006‑614(IT)I.
The issue in this case is the
deductibility of support amounts paid by Mr. Gray, the appellant, in
respect of the 2000 and 2001 taxation years. The deduction for support is
found in paragraph 60 of the Income Tax Act. In particular, the calculation of
the amount of support deductible in a year by a taxpayer is set out in
paragraph 60(b) of the Income Tax Act.
The formula involves a calculation
of the total amount of support paid by a taxpayer after 1996 less the amount of
child support paid under subparagraph B of that definition.
For the purposes of this appeal
only that part of paragraph 60(b)B is relevant. The provision reads:
"There may be deducted in
computing a taxpayer's income for a taxation year such of the following amounts
as are applicable:
"(b) total of all amounts
each of which is an amount determined by the formula A ‑ (B + C) where,
"A the total amount of
support --
"B is the total of all
amounts each of which is a child support amount that became payable by the
taxpayer to the particular person under an agreement or order on or after its
commencement day and before the end of the year in respect of a period that
began on or after its commencement day."
In this case, the dispute arises
as a result of there being a number of orders made with respect to payment of
support from the appellant to his ex‑spouse, both spousal support and
child support. The original order was made prior to May 1997, and subsequent
orders were made as set out in the reply to the notice of appeal.
The subsequent orders replaced the
initial order. The original order was replaced by an order dated June 13th,
1997. As counsel for the respondent points out, this is a replacement order.
It doesn't speak to any variation of the original order.
That order in turn was replaced by
an order in May 1998, an order made under the Divorce Act for corollary
relief. That order again was a replacement order rather than any order varying
a prior order by the terms of the order itself and under the provisions of the
Divorce Act so that the May 1998 order replaced the June 13th, 1997 order.
Subsequently, in February 2002 an
order was made varying the May 1998 order with respect to the payment of child
support to require the appellant to pay additional amounts in respect of
private school fees and camp fees for the daughter.
The question is: What was the
commencement day of the February 2002 order according to the definition of
commencement day in paragraph 56.1(4) of the Act.
The respondent alleges that the
commencement day of that order was the date, first date, at which the pre May
1997 order was replaced by another order, either June 13th, 1997 or May 1998,
and that therefore payments made under the February 2002 order were made under
an order with a commencement day of either June 13th, 1997 or May 1998.
The respondent argues that the
orders must be considered as a chain of orders that arise from the original pre
May 1997 order for support, and, therefore, where such a chain of orders
dealing with support exists, I have to look in the definition of commencement
day at paragraph (b) to determine commencement day through the entire chain of
orders up to the February 2002 order.
In my view, this submission is not
founded in the wording of the definition of commencement day, paragraph (b) in
particular.
What paragraph (b) attempts to do
is set the commencement day of an order made before May 1997, and it looks, in
doing so, at the day the order was made or where it was varied or replaced, the
date of the variation or the first replacement of that order. That gives us a
different day for the pre May 1997 order.
Once, however, there is a
subsequent replacement of a replacement of a pre May 1997 order the chain is
broken. There is no requirement to consider a subsequent replacement order as
being relevant for the purposes of determining a commencement day of an order
made before May 1997. This is a new order of which the commencement day must
be looked at under paragraph (a) of the definition of commencement day.
The second replacement order in
this case in May 1998 gave rise to a commencement day calculated or determined
under paragraph (a) of the definition of commencement day.
The subsequent variation in
February of 2002 is an order and it is an order made after April 1997, and so
according to the definition of commencement day, the February 2002 order would
also have a commencement day determined under paragraph (a) of that definition.
No provision is made in paragraph
(a) to take into account variations of orders for the purposes of establishing
the commencement day of the variation of another order. This February 2002
order is an order on its face. The fact that it varies a prior order does not
prevent it from being an order, and, therefore, in my view, it has a
commencement day on the date that it is made as it is made after April 1997.
The question then becomes what was
the day on which the February 2002 order was made. This becomes an issue
because the February 2002 order required the appellant to pay amounts of child
support retroactive to earlier dates prior to 2002.
Is the fact that the order
required retroactive payments of child support relevant to the determination of
the date the order was made? In my view, it is not.
The fact that an order provides
for retroactive payments of support does not cause the order itself to be made
on the date that the retroactive child support was required to be paid.
This is supported in part by the
rules of the Ontario Court Family Law Rules, rule 25, which states:
"An order is effective from
the day on which it is made unless it states otherwise."
This is an indication that the
date on which an order is effective is different from the date on which it is
made. The Court rules distinguish between the effective date of an order and
the date on which it is made, and in this case the retroactive portion of the
February 2002 order is the effective date of that portion of the order. It is
not though the date on which that order was made.
Further support for the position
that an order is made as of the date on which it is pronounced and signed is
found in the case of The Queen v. Larsson, 97 DTC 5425. The case dealt with
support payments. I refer to the comment of Mr. Justice MacDonald before
the court at page 5428:
"It is the usual rule that an
order of a court is effective from the date on which it is made unless it
provides otherwise. Thus, where a court does not explicitly state that it
intends for its order to apply retroactively, it will be assumed that the order
does not so apply."
Again, this echos the rule of the
Ontario Courts that effective dates may differ from the date on which an order
is made.
Construing the language of
paragraph (a) of the definition of commencement day according to its ordinary
meaning would in my view lead to the conclusion that an order of a court is
made on the date that the order is signed by the court.
In this case, the February 2002
order was pronounced Monday, the 11th day of February 2002 on its face and,
therefore, is the date on which the order was made.
That then becomes the commencement
day of the order and by virtue of paragraph 60(b), the calculation formula for
support amounts deductible, the amounts paid under that order are not amounts
to be taken into account or the obligation to pay the child support
retroactively does not become an obligation to be taken into the calculation of
the appellant's support deductions for 2001 and 2002 because the commencement
day began after those taxation years.
In order to be taken into
consideration in the calculation of support, only amounts that are payable on
or after the commencement day of the order are added into the calculation. In
this case, as the commencement day of the order of February 2002 is February 11th,
2002, no amounts payable before that date can be taken into account in
calculating the support and child support payable by the appellant for those
two years.
So to summarize, the commencement
day for the February 2002 order is determined under paragraph 56.1(4), the
definition of commencement day, paragraph (a) the date that the order is made.
The date the order was made was February 11th, 2002, and, therefore, only
amounts that became payable on or after that commencement day are amounts to be
considered under (b) of section 60, subparagraph B of the Act to calculate the
total amount of the child support payments that must be taken into account in
the calculation of support for that year.
On that basis, the appeal is
allowed and Mr. Gray is entitled to his costS, if any, of the hearing.
THE REGISTRAR: Order. Please
rise.
MR. GRAY: Thank you, Your Honour.
THE REGISTRAR: This court is now
adjourned until 2:00.
‑‑‑ Whereupon the
proceedings adjourned
at 12:46 p.m.
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