Nagy v. The Queen, 2003 TCC 282 (Informal Procedure)

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Appeal heard on April 15, 2003 at Prince Albert, Saskatchewan

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JUDGMENT

          The appeal from the reassessments made under the Income Tax Act for the 1998 and 1999 taxation years is dismissed in accordance with the terms of the attached reasons for judgment.

Signed at Vancouver, British Columbia, this 29th day of April 2003.

J.T.C.C.

REASONS FOR JUDGMENT

Paris, J.T.C.C.

[1]      The Appellant has appealed reassessments of income tax issued for his 1998 and 1999 taxation years.

[2]      The Minister of National Revenue (the "Minister") disallowed the deduction by the Appellant of the maintenance payments made by him to his ex-spouse of $8,052 in each year.

[3]      The issue in this case is whether the payments made by the Appellant prior to September 1, 1999 met the requirements of subsection 60.1(3) of the Income Tax Act (the "Act") and can be deducted as "prior payments".

[4]      The facts of the case are not in dispute. The Appellant and his ex-spouse have twin daughters born in 1989. The Appellant and his ex-spouse separated in March 1996, and the Appellant began making support payments of $671 a month in respect of the children to his ex-spouse. No written separation agreement was entered into by the Appellant and his ex-spouse until September 1999. A copy of that agreement was provided to the Court and marked as Exhibit A-3.

[5]      In order for the payments made by the Appellant to be deductible under paragraph 60(b) of the Act, they would have to comply with subsection 60.1(3) of the Act.

[6]      That provision requires an explicit recognition that the parties to the agreement intended it to apply to prior payments, and must refer to the past payments as having been paid and received under the written agreement.

[7]      In this case, the agreement states that the Appellant shall continue to make support payments and that the effective date of the agreement was March 16, 1996.

[8]      However, there is no explicit reference to prior payments, to the tax treatments of those payments or that the payments be considered to have been paid and received under the written agreement.

[9]      Subsection 60.1(3) is explicit with respect to these requirements. This Court held in the case of Cuberovicv. Canada, [2000] T.C.J. No. 286 that the parties to the agreement must indicate an intention to have the subsection apply to past payments.

[10]     In this case, there is no wording in the agreement that would allow me to find that the parties intended this result.

[11]     For these reasons, I must dismiss the appeal.

Signed at Vancouver, British Columbia, this 29th day of April 2003.

J.T.C.C.