Bégin v. The Queen, docket 2000-886-IT-I (Informal Procedure)

Date: 20010525

Docket: 2000-886-IT-I

BETWEEN:

GEORGES BÉGIN,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

(Delivered orally from the bench on March 19, 2001, at Québec, Quebec,

and edited at Ottawa, Ontario, on May 25, 2001)

Lamarre Proulx, J.T.C.C.

[1]            This is an appeal under the informal procedure for the 1998 taxation year.

[2]            The issue is whether the appellant can deduct $26,088 as a support amount under section 60 of the Income Tax Act ("the Act").

[3]            The facts on which the Minister of National Revenue ("the Minister") relied in making his reassessment are set out as follows in paragraph 4 of the Reply to the Notice of Appeal ("the Reply"):

[TRANSLATION]

(a)            in his tax return for the 1998 taxation year, the appellant stated that he had made support payments totalling $48,868, that is, $11,280 for his children and $37,588 for Claire Bérubé (hereinafter "former spouse");

(b)            the appellant claimed $37,588 as an allowable deduction for support payments;

(c)            the appellant and Claire Bérubé were married on December 24, 1977;

(d)            the appellant and his former spouse have two children: Véronique, who was born on December 13, 1978, and David, who was born on September 9, 1981;

(e)            the former spouse brought divorce proceedings on April 24, 1997;

(f)             according to the judgment on provisional measures dated July 9, 1998, the court:

(i)              ordered the appellant to pay his former spouse support in the amount of $940 a month ($470 on the 15th and $470 on the last day of each month) for his children, starting on February 15, 1998;

(ii)             ordered the appellant to pay his former spouse support in the amount of $1,000 a month ($500 on the 15th and $500 on the last day of each month) for herself, starting on February 15, 1998;

(iii)            ordered that the support amounts be payable directly to the applicant until such time as the appellant had not received instructions from the Ministère du Revenu;

(iv)           ordered that the support amounts be indexed in accordance with article 590 of the Civil Code of Québec;

(g)            the judgment divorcing the appellant and his former spouse was delivered on February 22, 1999, and, in determining the corollary relief thereunder, the court:

(i)              ordered the appellant to pay his former spouse $1,107.92 a month in support for the children of the marriage, David and Véronique, which was to be payable in accordance with the law starting from the date of the judgment;

(ii)             ordered the appellant to pay his former spouse $1,200 a month in support for herself, which was to be payable in accordance with the terms provided by law;

(iii)            ordered that the support amounts be indexed on January 1 of each year in accordance with the annual Pension Index;

(iv)           declared that the appellant owed his former spouse $50,000 in support, along with interest at the legal rate and the additional indemnity under article 1619 C.C.Q. starting from the date the pleadings had been served;

(v)            declared that the former spouse had to pay the appellant $30,818 in full and final settlement of his share of the family patrimony, along with interest at the legal rate and the additional indemnity under article 1619 C.C.Q. starting from the date the pleadings had been served;

(vi)           ordered the appellant to pay his former spouse $19,182 in support, which was to be payable within 30 days of the date of the judgment, along with interest at the legal rate and the additional indemnity under article 1619 C.C.Q. starting from the date the pleadings had been served;

(h)            accordingly, the lump sum payments referred to in subparagraphs (g)(iv), (v) and (vi) are not periodic payments and cannot be considered to be support amounts;

(i)             the appellant's employer has confirmed in writing that $22,780 in support was withheld from the appellant's earnings for the 1998 taxation year;

(j)             the amount of $22,780 included $11,280 in child support and $11,500 in support for the former spouse.

[4]            The ground of appeal is as follows:

                [TRANSLATION]

The support payment claimed for $27,588 [sic] is allowable because it is based on a judgment that was effective on April 24, 1997.

[5]            There was no testimonial evidence. Counsel for the appellant admitted the allegations in paragraph 4 of the Reply, aside from subparagraph 4(h). The judgment referred to in paragraph 4(g) was filed as Exhibit A-1. The court's conclusions include the following three:

                [TRANSLATION]

. . .

ORDERS the respondent to pay the applicant $1,107.92 a month in support for the children of the marriage, David and Véronique, which shall be payable in accordance with the law starting from the date of the judgment;

                ORDERS the respondent to pay the applicant $1,200 a month in support for herself, which shall be payable in accordance with the terms provided by law;

                . . .

                DECLARES that the respondent owes the applicant $50,000 in support, along with interest at the legal rate and the additional indemnity under article 1619 C.C.Q. starting from the date the pleadings were served;

[6]            Exhibit A-2 is the calculation of the $26,088 claimed as a deduction for support payments.

[TRANSLATION]

1998 SUPPORT PAYMENTS

AMOUNT CLAIMED:                                                                            $37,588

AMOUNT ALLOWED:                                                                        $11,500

AMOUNT CONTESTED:                                                                       $26,088

ORIGIN OF THE $26,088

-                Divorce judgment: February 22, 1999

-                Partition date: April 24, 1997

-                Lump sum: $50,000 (as support)

CALCULATION OF THE 1998 DEDUCTION

April 1997 to February 1999: 23 months

Thus, for 1998:       12 months X 50,000: $26,088

                                                23 months

Conclusion

[7]            According to subsection 60.1(4) of the Act, the term "support amount" is defined in subsection 56.1(4) of the Act. Those two subsections read as follows:

60.1(4)     The definitions in subsection 56.1(4) apply in this section and section 60.

56.1(4)     "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 common-law partner or former spouse or common-law partner of the payer, the recipient and payer are living separate and apart because of the breakdown of their marriage or common-law partnership and the amount is receivable under an order of a 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.

                                                                                                (Emphasis added.)

[8]            Paragraph 60(b) of the Act reads as follows:

60.            Other deductions. - There may be deducted in computing a taxpayer's income for a taxation year such of the following amounts as are applicable:

                ...

(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 on or 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;

[9]            The Act provides that a support amount is deductible if it is an amount payable on a periodic basis and receivable under an order of a tribunal or under a written agreement. There is nothing in the above judgment indicating that the $50,000 payment in question was made up in part of back payments of such support amounts. Even if that were the case, which it is not, the amount would be deductible the year the payment was made. Not all support payments are deductible. They must fit within the parameters set out in the Act.

[10]          The appeal is therefore dismissed.

Signed at Ottawa, Canada this 25th day of May 2001.

"Louise Lamarre Proulx"

J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]

2000-886(IT)I

BETWEEN:

GEORGES BÉGIN,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on March 19, 2001, at Québec, Quebec,

and judgment delivered from the bench by

the Honourable Judge Louise Lamarre Proulx

Appearances

Counsel for the Appellant:                  Daniel Cantin

Counsel for the Respondent:                              Diane Lemery

JUDGMENT

                The appeal from the assessment made under the Income Tax Act for the 1998 taxation year is dismissed.

Signed at Ottawa, Canada this 28th day of March 2001.

"Louise Lamarre Proulx"

J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]