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Citation: 2003TCC363
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Date: 20030917
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Docket: 2002-4566(IT)I
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BETWEEN:
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CRISTIAN NISTOR,
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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 was married to Maria
Laura Serban ("Maria") in Romania on July 26,
1974. Their daughter Andreea Clementina Nistor
("Andreea") was born on March 28, 1977.
[2] The Appellant and Maria were
divorced in 1981 pursuant to a Court Order issued under the laws
of Romania.
[3] The Appellant remarried and in
October 1996 the Appellant and his new wife moved to Canada.
[4] The Appellant became a Canadian
citizen in 2000. During the 2001 taxation year the Appellant
was a resident of Canada and a citizen of Canada.
[5] Pursuant to a decision of a Court
in Romania the Appellant was required to pay child support
payments to his former spouse for the support of Andreea. The
requirement to pay for the support of Andreea came to an end when
Andreea reached the age of majority under the laws of Romania,
i.e. on March 28, 1995.
[6] On the 2nd day of November 1996
the Appellant signed a document which is referred to as a
"Child Support Agreement" (Exhibit A-12). The opening
paragraph of this document reads as follows:
This Agreement refers to the maintenance obligations of
Cristian Nistor regarding his dependent daughter, Andreea
Clementina Nistor ...
[7] The Child Support Agreement (the
"Agreement") between the Appellant and Andreea dated
November 1996 provided as follows (Note - this is a summary of
the Agreement. It is not a quote from the actual Agreement.)
i) the
Appellant agreed to pay the Daughter up to $450.00 per month, not
exceeding an amount of $5,400 per year, and said payments would
be made by means of a credit card held by the Daughter, i.e. the
Appellant made payments on the Daughter's credit card;
ii) the
Daughter had a bank account established in Romania to receive the
amounts transferred from the Appellant via the credit card
facility;
iii) the
Agreement would remain in effect from the 11th day of October,
1996 as long as the Daughter remained in the University (the
University of Medicine in Bucharest, Romania); and
iv) the Daughter
undertook to preserve and forward to the Appellant all receipts
regarding the withdrawal of money as cash advances on credit
cards or purchases.
[8] The Agreement was read and agreed
to by Maria, the Appellant's former spouse.
[9] Andreea was admitted as a full
time student in the University of Medicine and Pharmacy in
Bucharest, Romania in October 1996 and was a student at the said
University during the 2001 taxation year.
[10] When the Appellant filed his Canadian
income tax return for the 2001 taxation year he deducted the
amount of $4,569.37 that he had paid to his daughter in that
year.
[11] The Minister of National Revenue (the
"Minister") reassessed the Appellant's 2001
taxation year and disallowed the child support payment of
$4,569.37 that was claimed by the Appellant.
B. ISSUE
[12] The issue is whether the Appellant is
entitled to deduct the amount of $4,569.37 as a child support
payment in determining his income for the 2001 taxation
year.
C. ANALYSIS
[13] Paragraph 60(b) of the Income
Tax Act (the "Act") permits a taxpayer in
certain circumstances to deduct amounts paid to a spouse or
former spouse for the benefit of the children of the marriage in
computing his income for a taxation year.
[14] Subsection 60.1(1) of the Act
states that for the purpose of paragraph 60(b), where
an order or agreement, or any variation thereof, provides for the
payment of an amount by a taxpayer to a person for the benefit of
the person, children in the person's custody or both the
person and those children, the amount or any part thereof when
payable, is deemed to be payable to and received by that person.
In other words, where an amount is not paid to the former spouse
but is paid to the benefit of the child in that person's
custody, the amount that has been paid is deemed to have been
paid to the spouse so that the payer may deduct the amount
pursuant to paragraph 60(b).
[15] The Appellant testified that Andreea
was in the custody of his former spouse in the 2001 taxation
year.
[16] Exhibit A-11 is an Affidavit of Maria,
the Appellant's former spouse. The Affidavit was translated
into the English language and was sworn before a Notary on the
26th day of March 2002. In the Affidavit Maria said:
I declare that while living together with Andreea in the same
apartment I received directly the support amount paid monthly by
Cristian Nistor. Part of the money was used by Andreea to pay for
half of the heating, hydro, phone, water and Residential Fees for
the apartment we are both living in. The rest was used for her
own needs, books, transportation, clothing, entertainment, etc.
but also to buy food for her. The entire support amount received
in the conditions described was in fact for the support of
Andreea and even if sent to me the destination would have
remained the same. I also had my own contribution to the house
expenses but this was proportionate to my income.
[17] I accept the testimony of the Appellant
supported by the Affidavit of Maria that Andreea was in the
custody of Maria (the former spouse) in the relevant period.
[18] I also wish to note that the provisions
of the 1996 Act would apply to support orders predating
May 1997. This conclusion follows since support orders predating
May 1997 lack a "commencement date" within the meaning
of subsection 56.1(4) of the Act. Subsection 56.1(4)
defines "commencement date" as the day, after April
1997 upon which the court order or written agreement institutes
child support payments. In this situation, the Appellant and
Andreea reached their agreement in November 1996.
[19] In my opinion the amount of $4,569.37
was a support amount within the meaning of subsection 60.1(1) of
the Act and the Appellant is allowed to deduct this amount
pursuant to paragraph 60(b) in determining his income for
the 2001 taxation year.
[20] In support of my conclusion I refer to
the following decisions of the Tax Court.
[21] In Sadler v. The Queen, [1997] 3
C.T.C. 2698 Mr. Justice Bell said that "custody" should
be given its ordinary meaning rather than its legal meaning and
allowed the appeal.
[22] In Marsh v. The Queen, [2001]
T.C.J. No. 629 (Q.L.) Mr. Justice O'Connor held
that the taxpayer was entitled to deduct child support payments
made to the taxpayer's adult son who was living in a
university dormitory.
[23] The appeal is allowed without
costs.
Signed at Vancouver, British Columbia, this 17th day of
October 2003.
Little, J.
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