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Docket: 2002-4580(IT)I
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BETWEEN:
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ANTHONY D. LEAH,
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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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____________________________________________________________________
Appeal heard on May 8, 2003 at Toronto, Ontario
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Before: The Honourable Judge L.M. Little
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Appearances:
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Counsel for the Appellant:
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Melvin I. Rotman
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Counsel for the Respondent:
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Lorraine Edinboro
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____________________________________________________________________
JUDGMENT
The
appeal from the assessment made under the Income Tax Act
for the 2000 taxation year is allowed, without costs, and
the assessment is referred back to the Minister of National
Revenue for reconsideration and reassessment in accordance with
the attached Reasons for Judgment.
Signed at Vancouver, Canada, this 27th day of June 2003.
J.T.C.C.
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Citation: 2003TCC367
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Date: 20030627
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Docket: 2002-4580(IT)I
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BETWEEN:
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ANTHONY D. LEAH,
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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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REASONS FOR JUDGMENT
Little, J.
A. FACTS
[1] The Appellant and Sheran Elizabeth
Johnston ("Sheran") were married on February 6,
1982.
[2] Two children were born of the
marriage namely:
- Reed Merle
Johnston Leah (hereinafter "Reed") - October 14,
1982
- Jessica Marlee
Johnston Leah (hereinafter "Jessica") - October 13,
1984
[3] The Appellant and Sheran separated
and on the 21st day of January 1989 they entered into a
Separation Agreement (the "Separation Agreement")
(Exhibit A-1).
[4] The Separation Agreement provided,
in part, as follows:
13. Tony (the Appellant)
agrees to pay 50% of the child care cost incurred for the infants
Reed and Jessica for care during a regular week Monday to Friday
(7:30 a.m. to 5:30 p.m.) now being primarily the cost of Mrs.
Whyte.
...
15. It is agreed that Tony
shall pay to Sheran $300.00 monthly ($150.00 for each child) in
total for the additional expenses incurred by Sheran for clothing
and food with respect to the said infants Reed and Jessica such
sum to be adjusted by the annual percentage increase or decrease
in the C.P.I. Canada every January.
16. Sheran shall pay the
R.E.S.P. contribution for one of the children of the marriage and
Tony will pay for one of such children.
17. The amount to be paid
by Tony as set forth in the preceding paragraphs 13, 15 and 16
will be calculated periodically by the parties and reduced to a
monthly child support payment which Tony will pay to Sheran on
the first day of each month. Such monthly support figure shall be
the sum of $618.17 at the time of the execution of this Agreement
(this figure is comprised of $300.00 child support, $281.67 being
one half cost of baby-sitter and $36.50 being R.E.S.P.).
[5] The Appellant testified that in
the 1997-2000 taxation years he made child support payments to
Sheran as follows:
Allocation
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1997
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$1,050 x 12
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$773.60
276.00
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adjusted for C.I.P.
50% babysitter
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1998
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$1,100 x 12
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$786.00
314.00
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adjusted for C.I.P.
50% babysitter
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1999
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$1,100 x 12
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$793.00
307.00
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adjusted for C.I.P.
50% babysitter
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2000
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$1,050 x 12
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$806.50
243.50
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adjusted for C.I.P.
50% babysitter
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[6] The Appellant testified that he
was allowed to deduct the child support payments that he made to
Sheran in determining his income for the 1997, 1998 and 1999
taxation years.
[7] The Appellant testified that when
he filed his 2000 income tax return he deducted child support
payments of $12,600.00.
[8] The Minister of National Revenue
(the "Minister") disallowed the child support payments
made by the Appellant to Sheran.
[9] In the Notification of
Confirmation the Minister stated:
As the written agreement entered into with your ex-spouse,
Sheran Johnston on July 22, 1997 varied the child support
provided for in the separation agreement dated January 21, 1989
you are no longer entitled to a deduction for child support under
subsection 60(b) of the Income Tax Act.
(Note: the "agreement" referred to in the
Notification is the note that was filed as Exhibit A-2 - see
paragraph 5 above.)
B. ISSUE
[10] Is the Appellant entitled to deduct the
amount of $12,600.00 as child support payments in determining his
income for the 2000 taxation year?
C. ANALYSIS
[11] I have carefully considered the
documents that were filed and the evidence presented to the Court
and I have concluded that the note dated the 22nd day of July
1997 (Exhibit A-2) did not constitute a new or varied Separation
Agreement. The Separation Agreement clearly specified that the
Appellant was required to pay additional amounts to his ex-spouse
contingent upon certain events, including annual cost of living
increases. The note was simply a factual statement illustrating
what was owed by the Appellant.
[12] It therefore follows that the note that
was filed as Exhibit A-2 did not establish or create a
commencement date.
[13] I have therefore concluded that the
Appellant is entitled to deduct child support payments paid to
Sheran in the amount of $12,600.00 in determining his income for
the 2000 taxation year.
[14] Before concluding my Reasons I wish to
also add that I have determined that the note that was filed as
Exhibit A-2 is not a valid legal document since the signatures of
the Appellant and Sheran were not witnessed. Subsection 55(1) of
the Family Law Act of Ontario, R.S.C. 1990 reads as
follows:
55. Form of Contract -
(1) A domestic
contract and an agreement to amend or rescind a domestic contract
are unenforceable unless made in writing, signed by the parties
and witnessed.
[15] In Re Moore and Moore, 27 O.R.
(2d) 771 His Honour Judge Steinberg of the Unified Family
Court of Ontario referred to the Family Law Reform Act and
said at page 10:
I believe that contracts and agreements which purport to deal
with the issues set out in ss. 51 and 53 of the Act and which do
not comply with the requirements of formality in s. 54(1) are
void and therefore legal nullities. That is to say that
those contracts or agreements are in fact not contracts or
agreements at all.
[16] If Exhibit A-2 is not a valid legal
document it follows that the note could not be said to alter or
vary the Separation Agreement.
[17] The appeal is allowed, without costs,
and the assessment is referred back to the Minister of National
Revenue for reconsideration and reassessment in accordance with
these Reasons for Judgment.
Signed at Vancouver, Canada, this 27th day of June 2003.
J.T.C.C.
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