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Citation: 2003TCC199
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Date: 20030414
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Docket: 2002-3101(IT)I
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BETWEEN:
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MICHEL NOLIN,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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[OFFICIAL
ENGLISH TRANSLATION]
AMENDED REASONS FOR JUDGMENT
Tardif, J.T.C.C.
[1] This
is an appeal from an assessment for the 1999 taxation year.
[2] In
establishing and confirming the January 22, 2002, Notice of Reassessment
for the 1999 taxation year, the Minister of National Revenue ("the
Minister") relied on the following assumptions of fact in particular:
[TRANSLATION]
(a) the appellant
and Yolande Reny were married on April 3, 1976;
(b) from the
marriage of the appellant and Yolande Reny were born two daughters:
(i)
Emmanuelle, born on June 18, 1976, and
(ii) Émilie,
born on March 6, 1983;
(c) the appellant
and Yolande Reny stopped living together around August 1, 1996;
(d) in support of
his request for adjustment for the 1999 taxation year, the appellant submitted
a document in which Yolande Reny acknowledged receiving from him support
payments in the amount of $15,000;
(e) the appellant
then provided the February 19, 2001, Quebec Superior Court divorce
judgment by Legris J.S.C., confirming and making binding a
December 22, 2000, draft agreement between the parties;
(f) the
December 22, 2000, draft agreement between the parties did not contain any
retroactive provisions provided for in subsection 60.1(3) of the Income
Tax Act (hereinafter "the Act");
(g) lastly, the
appellant submitted to the Minister a document dated July 9, 2001, in
which the parties acknowledge that, at the time of the August 1996
separation, an agreement was reached whereby, among other things, the appellant
would pay Yolande Reny on a regular basis, that is, every 15 days, support
totalling $15,000 for the 1999 taxation year;
(h) the Minister
considers that the support in the amount of $15,000 paid by the appellant to
Yolande Reny for the 1999 taxation year was not made under a written agreement
or order of a competent tribunal.
[3] After
being sworn, the appellant admitted the truth of paragraphs (a), (b), (c),
(d), and (e).
[4] At
issue is whether the amount of $15,000 paid by the appellant to Yolande Reny
was deductible as support or other allowance payable on a periodic basis for
the 1999 taxation year.
[5] The
appellant, clearly well prepared to argue his case, adduced a number of
documents in support of his claims. He also called his former spouse as a
witness. It was clear from the evidence adduced by the appellant that he did
indeed pay his former spouse an amount of $15,000; as well, by her signature
(Exhibit A-5), his former spouse attested that she received that amount.
[6] The
appellant argued that he regularly and consistently met his undertakings; he
adduced a statement establishing that he paid $12,000 for the 1997 taxation
year.
[7] On
the basis of receipts, the appellant argued that the payments were made as
support, which he agreed to pay; he added that he paid those amounts, not out
of mere generosity, but out of obligation.
[8] I
do not doubt that the appellant paid the amount at issue under an agreement; he
would certainly not have agreed to pay such an amount without feeling obliged
to do so.
[9] The
problem lies not with that fact but, essentially, with the applicable
legislative provision that periodic payments must be made under a written
agreement or order by a competent tribunal in order to be considered support
payments.
[10] This requirement is basic and utterly essential. The main exhibit
adduced by the appellant in this regard is the February 19, 2001, judgment
by Legris J.S.C., which reiterates at length a draft agreement between the
parties. Under heading (e), "Spousal support", the draft agreement
provides as follows:
[TRANSLATION]
(e) Spousal
support
Starting on the date of the divorce
judgment, the male applicant shall pay the female applicant annual support
equivalent to $20,000 for herself, in order to meet her needs.
However, from January 1, 2003, to
December 31, 2007, the amount of support shall be reviewed: Old Age
Pension and Quebec Pension Plan amounts received by the female applicant shall
be deducted from the amount of support owed by the male applicant to the female
applicant.
In consideration of the benefits
hereby granted by the male applicant, the applicants agree that the
above-described support shall terminate as of right on December 31, 2007.
Starting on January 1, 2008,
no support shall be requested by the female applicant from the male applicant.
Starting on January 1, 2002,
the amount of support shall be indexed annually depending on the rate of
increase paid to the male applicant by his employer.
With the exception of the cases set
out below, the amount of support shall not be reviewed if the male applicant's
income increases or decreases.
If the male applicant becomes
disabled, the amount of support shall be reviewed, taking into account the
income paid to the male applicant by his employer as a result of the
disability, indicated as a percentage of the income paid to him prior to the
disability.
If there is cessation of the male
applicant's employment that is attributable to his employer, the amount of
support shall be revised downward, where applicable, taking into account all
income of the male applicant and the female applicant. For the purposes of
calculation, the applicants set out the following reasoning.
If the male applicant's total
income is $75,000 and the female applicant's income is $1,000, the female
applicant shall be entitled to 100 per cent of the amount of support,
that is, $20,000.
If the female applicant is
successful in finding employment or in exercising an activity that generates
net income exceeding $3,000, she shall so inform the male applicant and,
where applicable, shall agree to review the amount of support accordingly.
Under Quebec's Act to facilitate
the payment of support, R.S.Q.,
c. P-2.2, the amount of support should be
collected by means of the deduction method: the male applicant's employer
should deduct the amount of support from the male applicant's salary and then
remit it to the Quebec Minister of Revenue, who shall remit the amounts of
support collected to the female applicant every two weeks.
Any agreements concerning
readjustments of the amount of support shall be made in writing and shall be
signed by the applicants. These agreements shall be binding on Quebec's
Ministère du Revenu for the purposes of applying Quebec's Act to facilitate
the payment of support as though the readjustments were set out in the
judgment to be handed down and Quebec's Ministère du Revenu is ordered to
comply with them.
The applicants agree that, until an
official of Quebec's Ministère du Revenu intervenes in the case in order to
deduct the amount of support from the male applicant's salary, the debtor shall
pay the support into an account authorized by the female applicant every other
week on Thursdays.
[11] There is no express provision concerning the amount paid prior to the
judgment.
[12] Essentially, Exhibits A-4 and A-5 are receipts certifying that
the appellant did indeed pay $15,000 for the 1999 taxation year and $12,000 for
the 1997 taxation year. These exhibits are not an agreement creating rights and
obligations but are an acknowledgement of the outcome of a possible agreement,
the evidence of which has never established that it was written. Since that
requirement is absolutely fundamental and inescapable, the appeal must be
dismissed.
Signed at Ottawa,
Canada, this 14th day of April 2003.
J.T.C.C.
Translation certified true
on this 30th day of April 2004.
Sophie Debbané,
Revisor
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