Date: 20010511
Docket: 2000-1208-IT-I
BETWEEN:
JACQUES GAGNÉ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Lamarre Proulx, J.T.C.C.
[1]
These are appeals concerning the 1994 to 1996 taxation years.
[2]
The issue is whether the amounts paid by the appellant as support
to his child's mother, to whom he was not married, pursuant
to a judgment dated April 21, 1987, may be deducted by him
under paragraph 60(c) of the Income Tax Act (the
"Act").
[3]
The facts on which the Minister of National Revenue (the
"Minister") relied in making his reassessments are set
out in paragraph 7 of the Reply to the Notice of Appeal (the
"Reply") as follows:
[TRANSLATION]
(a)
the appellant and Nicole Bergeron are the parents of a boy named
Nicolas, who was born on April 19, 1983;
(b) a
judgment of the Superior Court dated April 21, 1987, that was
rendered by Mr. Justice Gérald Boisvert ordered the
appellant to pay Nicole Bergeron $75 a week for the
maintenance of their son;
(c)
the appellant and Nicole Bergeron did not jointly elect to have
the total amount paid pursuant to the order be taxable for the
recipient and deductible for the payer;
(d)
the amounts claimed by the appellant as support for the years at
issue were backed up by receipts from the Government of Quebec,
specifically the judicial services branch of the Department of
Justice;
(e)
in computing the appellant's income for the 1994, 1995 and
1996 taxation years, the Minister disallowed the deduction
claimed for alimony or other allowance payable on a periodic
basis.
[4]
The appellant was the only person who testified. He admitted the
subparagraphs of the Reply, except for subparagraph 7(c).
[5]
The appellant said that in 1988 and 1989 he had obtained a letter
from Revenue Canada authorizing his employer to decrease his
source deductions given that his income would be reduced because
of the support payments. He said that the letter was sent
following the receipt of the judgment referred to in subparagraph
7(b) of the Reply. The correspondence was not produced because
the appellant no longer had the documents in his possession.
[6]
In the appellant's view, the Minister is bound by that
letter.
[7]
As Exhibit A-1, the appellant filed the aforementioned
judgment. He read the following paragraph found at page 2
thereof:
[TRANSLATION]
The respondent is currently cohabiting with a woman who has a
child of whom he is not the father. The Court must immediately
make it clear that the respondent has no obligation to either
that woman or her child. His primary obligation is to see to his
son's maintenance, and his share—given each party's
income—should be $74.03 a week. This does not take account
of the unfavourable tax consequences for the applicant, who will
have to pay income tax on the amount of the support payable by
the respondent, so the request for $75.00 a week is more than
reasonable.
[8]
According to the appellant, the reference to the unfavourable tax
consequences for the applicant indicated that the recipient and
the taxpayer intended that the support be taxable for the
recipient and deductible for the payer.
Analysis
[9]
The analysis of this case requires a historical review 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 this 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;"
[10] The
provision was brought into force in accordance with subsection
28(13) of the same amending statute, which read 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.
[11] Paragraph
60(c) of the Act did not apply to the appellant in
1987 because he was not married. Paragraph 60(c.1)
applied to unmarried persons provided that the recipient came
within a prescribed class described in the laws of the province
where the recipient lived. Only Ontario had such legislation.
[12] Paragraph
60(c.1) was amended as follows in 1988 by S.C. 1988,
c. 55, s. 37(1):
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;"
(Emphasis added.)
[13] This
provision was brought into force in accordance with the
conditions set out in subsection 37(3) of the 1988 amending
statute, which read as follows:
(3)
Subsection (1) is applicable
(a) with respect to orders made under
the laws of Ontario, to the 1986 and subsequent taxation years,
and
(b) in any other case, to the 1988
and subsequent taxation years,
except that, with respect to amounts received pursuant to
orders made after December 11, 1979 under the laws of Ontario, in
applying subparagraph 60(c.1)(i) of the said Act, as
enacted by subsection (1), the references therein to
"February 10, 1988" and "February 11, 1988"
shall be read as references to "December 11, 1979" and
"December 12, 1979 ", respectively.
(Emphasis added.)
[14] The
effect of the amendment was to eliminate the need to come within
a prescribed class of persons described in the laws of a
province. The amendment was of general application for orders
made after February 10, 1988. However, for orders made on or
before February 10, 1988, the taxpayer and the recipient had to
jointly elect to have paragraphs 60(c.1) and
56(1)(c.1) apply with respect to the payment.
[15] Paragraph
60(c.1) of the Act was amended again in 1993, the
same year that de facto spouses were included in the
concept 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:
(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;
[16]
Subsection 20(12) of the same amending statute reads as
follows:
(12)
Subsection (2) applies to orders made after 1992.
[17] Paragraph
60(c.1) continues to apply to orders made before 1993. It
was repealed only as regards orders made after 1992. Otherwise,
based on the wording of the new paragraph 60(c) of the
Act, the appellant would be entitled to deduct the support
he paid in 1994. However, that provision applies only to orders
made after 1992. For orders made before 1993, the former
provision, paragraph 60(c.1), remains applicable.
[18] As
regards the argument that the Minister is bound by his previous
assessments, the courts have consistently held that the
Act is what takes precedence. As for the argument that the
election required by paragraph 60(c.1) of the
Act was made since the judgment expressed the idea that
the recipient would be taxed on the support paid, it cannot be
accepted either because that is not the election provided for in
the Act.
[19] The
appeal must be dismissed.
Signed at Ottawa, Canada, this 11th day of May 2001.
"Louise Lamarre Proulx"
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
2000-1208(IT)I
BETWEEN:
JACQUES GAGNÉ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on March 6, 2001, at
Montréal, Quebec, by
the Honourable Judge Louise Lamarre Proulx
Appearances
Agents for the
Appellant:
Benoît Champoux
Vincent Brousseau
Counsel for the
Respondent:
Mounes Ayadi
JUDGMENT
The
appeals from the assessments made under the Income Tax Act
for the 1994, 1995 and 1996 taxation years are dismissed in
accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 11th day of May 2001.
J.T.C.C.
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