[OFFICIAL ENGLISH TRANSLATION]
Date: 20011030
Docket: 2000-1170(IT)I
1999-4762(IT)I
98-3850(IT)I
BETWEEN:
GILLES G. BEAUPRÉ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Lamarre Proulx, J.T.C.C.
[1] These appeals, which were heard on
common evidence, concern the appellant's 1995 to 1998
taxation years.
[2] The issue is whether the amounts
paid by the appellant to his child's mother, to whom he was
not married, in accordance with a judgment dated
November 27, 1984, may be deducted by the appellant under
the provisions relating to the deduction of support in the
Income Tax Act (the "Act").
[3] The facts on which the Minister of
National Revenue (the "Minister") relied are admitted
and are, to all intents and purposes, identical for the taxation
years in issue:
(1) The appellant and
Agathe Forget were de facto spouses until 1979. A daughter
named Amélie was born of their union.
(2) A judgment rendered on
November 27, 1984, awarded the mother custody of
Amélie. Under the same judgment, the appellant is required
to pay his former de facto spouse a weekly amount of $75 for his
child. This support is indexed on every anniversary date of the
judgment.
(3) During the taxation years in
issue, the appellant lived separate and apart from
Ms. Forget.
[4] For 1995 and 1996, the Minister
disallowed the deduction of the amounts paid by the appellant as
support or other allowance payable on a periodic basis because
the parties had not made a joint election in writing providing
that the said amounts would be governed by
paragraphs 56(1)(c.1) and 60(c.1) of the
Act.
[5] For 1997 and 1998, the Minister
disallowed the deduction of the amounts claimed because the
parties had not made a joint election in writing providing that
the said amounts would be governed by subsection 56.1(2)
(formerly paragraph 56(1)(c.1)) and
subsection 60.1(2) (formerly paragraph 60(c.1))
of the Act. It will be seen below that these are not the
relevant sections.
Analysis
[6] For the purposes of the analysis
of this case, it is necessary to look at the history of the
relevant provision. Paragraph 60(c.1) of the
Act was added by S.C. 1980-81-82-83,
c. 140, s. 28(2):
28(2) Paragraph 60(c) of the said Act
is repealed and the following substituted therefor:
"(c) an amount
paid by the taxpayer in the year, pursuant to an order of a
competent tribunal, as an allowance payable on a periodic basis
for the maintenance of the recipient thereof, children of the
recipient, or both the recipient and children of the recipient
if, at the time the payment was made and throughout the remainder
of the year, he was living apart from his spouse to whom he was
required to make the payment;
(c.1) an amount paid by the
taxpayer in the year, pursuant to an order made in accordance
with the laws of a province by a competent tribunal, as an
allowance payable on a periodic basis for the maintenance of the
recipient thereof, children of the recipient, or both the
recipient and children of the recipient if, at the time the
payment was made and throughout the remainder of the year, he was
living apart from the recipient who was an individual within a
prescribed class of persons described in the laws of the
province;"
[7] Subsection 28(2) was brought into
force in accordance with subsection 28(13) of the same amending
statute, which reads as follows:
(13) Subsection (2) is
applicable with respect to payments made
(a) in the
case of an order made after December 11, 1979, after that date;
and
(b) in any
other case where the taxpayer and the recipient agree in writing
at any time in a taxation year, in the year and subsequent
taxation years.
[8] Paragraph 60(c) of the
Act (above) did not apply to the appellant because he was
not married. Paragraph 60(c.1) applied in the case of
unmarried persons, except that the recipient had to be an
individual within a prescribed class of persons described in the
laws of the beneficiary's province of residence. Ontario
alone had such legislation.
[9] Paragraph 60(c.1) was
amended in 1988 by S.C. 1988, c. 55, s. 37(1), as
follows:
37(1) Paragraph 60(c.1) of the
said Act is repealed and the following substituted therefor:
"(c.1) an amount paid by the
taxpayer in the year, pursuant to an order made by a competent
tribunal in accordance with the laws of a province, as an
allowance payable on a periodic basis for the maintenance of the
recipient thereof, children of the recipient, or both the
recipient and children of the recipient if
(i) the order
was made
(A) after February 10,
1988, or
(B) before February 11,
1988 and the taxpayer and the recipient jointly elected before
the end of the year to have this paragraph and paragraph
56(1)(c.1) apply with respect to the payment,
(ii) at the time the
payment was made and throughout the remainder of the year, the
taxpayer was living apart from the recipient, and
(iii) the taxpayer
required to pay the amount is an individual of the opposite sex
who
(A) before the date of the
order cohabited with the recipient in a conjugal relationship,
or
(B) is the natural parent
of a child of the recipient;"
[10] That amendment eliminated the
requirement of belonging to a prescribed class of persons
described in the laws of a province. Its application was general
for orders made after February 10, 1988. However, in the
case of orders made before February 11, 1988, the taxpayer
and the beneficiary had to make, or to have made, a joint
election in writing to have paragraph 60(c.1) and
paragraph 56(1)(c.1) apply to the payment.
[11] Paragraph 60(c.1) of the
Act was amended again in 1993, the year in which the
notion of common law spouse was included in that of spouse.
Subsection 20(2) of Schedule VIII to An Act to revise
certain income tax law amendments in terms of the revised Income
Tax Act and Income Tax Application Rules, S.C. 1994,
c. 7, replaced paragraph 60(c.1) with paragraph
60(c). Subsection 20(2) reads as follows:
20(2) Paragraph 60(c.1) of the
Act is replaced by the following:
. . .
(c) an amount
paid by the taxpayer in the year as an allowance payable on a
periodic basis for the maintenance of the recipient, children of
the recipient or both the recipient and the children, if
(i) at the
time the amount was paid and throughout the remainder of the year
the taxpayer was living separate and apart from the
recipient,
(ii) the taxpayer is
the natural parent of a child of the recipient, and
(iii) the amount was
received under an order made by a competent tribunal in
accordance with the laws of a province;
[12] Subsection 20(12) of the same
amending statute reads as follows:
20(12) Subsection (2) applies to orders made after
1992.
[13] Paragraph 60(c.1) still
applies to orders made prior to 1993. It has been repealed solely
in respect of orders made after 1992. Otherwise, under the new
paragraph 60(c) of the Act, the appellant
would be entitled to claim a deduction in respect of the support
he paid in 1995 and 1996. However, since that provision applies
only to orders made after 1992, the former
paragraph 60(c.1) continues to apply to those made
prior to 1993.
[14] The appeals must therefore be dismissed
in respect of 1995 and 1996. I have previously considered this
question in Gagné v. Canada, [2001] T.C.J.
No. 304 (Q.L.). Must the appeals for 1997 and 1998 also be
dismissed?
[15] Paragraphs 60(b) and
(c) of the Act were replaced in 1996 by means of
subsection 10(1) of the Income Tax Budget Amendments Act,
1996 ("Budget Amendments Act, 1996"), S.C.
1997, c. 25, which reads as follows:
10(1) Paragraphs 60(b) and (c)
of the Act are replaced by the following:
(b)
support - the total of all amounts each of which is an
amount determined by the formula
A - (B + C)
where
A is the total
of all amounts each of which is a support amount paid after 1996
and before the end of the year by the taxpayer to a particular
person, where the taxpayer and the particular person were living
separate and apart at the time the amount was paid,
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 after its
commencement day, and
C is the total
of all amounts each of which is a support amount paid by the
taxpayer to the particular person after 1996 and deductible in
computing the taxpayer's income for a preceding taxation
year;
[16] That provision was brought into effect
in accordance with subsection 10(2) of that same amending
statute, which reads as follows:
10(2) Subsection (1) applies to amounts
received after 1996.
[17] The terms used in
paragraph 60(b), and in particular the words
"support amount", are defined in
subsection 56.1(4) of the Act, which was added by
subsection 9(6) of the Budget Amendments Act, 1996,
which reads as follows:
9(6) Section 56.1 of the Act is
amended by adding the following after subsection (3):
(4) The definitions in
this subsection apply in this section and section 56.
"child support amount " means any support amount
that is not identified in the agreement or order under which it
is receivable as being solely for the support of a recipient who
is a spouse or former spouse of the payer or who is a parent of a
child of whom the payer is a natural parent.
"commencement day" at any time of an agreement or
order means
(a) where the
agreement or order is made after April 1997, the day it is made;
and
(b) where the
agreement or order is made before May 1997, the day, if any, that
is after April 1997 and is the earliest of
(i) the day
specified as the commencement day of the agreement or order by
the payer and recipient under the agreement or order in a joint
election filed with the Minister in prescribed form and
manner,
(ii) where the
agreement or order is varied after April 1997 to change the child
support amounts payable to the recipient, the day on which the
first payment of the varied amount is required to be made,
(iii) where a subsequent
agreement or order is made after April 1997, the effect of which
is to change the total child support amounts payable to the
recipient by the payer, the commencement day of the first such
subsequent agreement or order, and
(iv) the day specified in
the agreement or order, or any variation thereof, as the
commencement day of the agreement or order for the purposes of
this Act.
"support amount" means an amount payable or
receivable as an allowance on a periodic basis for the
maintenance of the recipient, children of the recipient or both
the recipient and children of the recipient, if the recipient has
discretion as to the use of the amount, and
(a) the
recipient is the spouse or former spouse of the payer, the
recipient and payer are living separate and apart because of the
breakdown of their marriage and the amount is receivable under an
order of competent tribunal or under a written agreement; or
(b) the payer
is a natural parent of a child of the recipient and the amount is
receivable under an order made by a competent tribunal in
accordance with the laws of a province.
[18] The provisions regarding the
application of subsection 9(6), which are found in
subsection 9(8) of the same Act, state that the meaning of
"support amount" does not include an amount that was
not previously included:
9(8) Subsection (6)
applies after 1996, except that a support amount, as
defined in subsection 56.1(4) of the Act, as enacted by
subsection (6), does not include an amount that if paid and
received would, but for this Act, not be included in computing
the income of the recipient of the amount.
[19] These provisions were amended by S.C.
1998, c. 19, s. 307(1), to read as follows:
9(8) Subsection (6) applies
after 1996, except that
(a) a support
amount, as defined in subsection 56.1(4) of the Act, as enacted
by subsection (6), does not include an amount
(i) that was
received under a decree, order or judgment of a competent
tribunal, or under a written agreement, that does not have a
commencement day (within the meaning assigned by that subsection
56.1(4)), and
(ii) that if paid
and received would, but for this Act, not be included in
computing the income of the recipient of the amount; and
(b) . . .
[20] But for the provisions respecting
application referred to in paragraphs [18] and [19] of these
reasons, paragraph 60(b) and subsection 56.1(4)
of the Act would apply to the amounts in issue for the
1997 and 1998 taxation years.
[21] In the Reply it was submitted that the
appellant was not entitled to deduct as support payable on a
periodic basis the payments made during the 1997 and 1998
taxation years to Ms. Forget for the maintenance of
Amélie, because the parties did not jointly elect in
writing to have subsections 60.1(2) and 56.1(2), which, it
was asserted, replace the former
paragraphs 56(1)(c.1) and 60(c.1), apply to
the amounts paid. This submission is without foundation.
[22] Subsection 60.1(2) expands the
scope of paragraph 60(b) by providing that certain
expenses incurred for the maintenance of a person, children in
that person's custody, or both that person and the children
are deemed to be amounts payable by the taxpayer to that person
and receivable by that person as an allowance on a periodic
basis. The expenditures to which that provision applies are
payments to third parties and often take the form of direct
payments, in particular for medical, education, mortgage and
rental expenses. They are not support payments as such.
[23] In one of his notices of appeal, the
appellant raised the matter of the unconstitutionality of the
provisions denying an unmarried parent the benefit of the
deduction for support payments. Counsel for the respondent
referred to Bergman v. Canada, [1993] F.C.J.
No. 1429 (Q.L.), a case in which the Federal Court of Appeal
held those provisions not to be discriminatory.
[24] The appeals are dismissed on the
grounds that, in the circumstances described above, the deduction
of support payments is not permitted under the relevant statutory
provisions and that those provisions are constitutional.
Signed at Ottawa, Canada, this 30th day of October 2001.
J.T.C.C.
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