Date: 20001109
Docket: 1999-3131(IT)I
BETWEEN:
JOHN FRIESEN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Counsel for the Appellant: Bruce D. Gregory
Agent for the Respondent: Stacy Cawley
(Student-at-law)
____________________________________________________________________
REASONS FOR JUDGMENT
(Delivered orally from the Bench at
Winnipeg, Manitoba on August 24, 2000)
McArthur J.T.C.C.
[1] This is an appeal from an
assessment for the 1995 taxation year. The issue is the
deductibility under subsection 60.1(3) and paragraph 60(b)
of the Income Tax Act of payments made by the Appellant to
his spouse, from whom he was separated, for her support and that
of their three children.
[2] In 1995, paragraph 60(b)
permitted the deduction of alimony or maintenance payments as
follows,
60 There may be
deducted in computing a taxpayer's income for a taxation year
such of the following amounts as are applicable:
(a) ...
(b) an amount
paid by the taxpayer in the year as alimony or other allowance
payable on a periodic basis for the maintenance of the recipient,
children of the recipient or both the recipient and the children,
if the taxpayer, because of the breakdown of the taxpayer's
marriage, was living separate and apart from the spouse or former
spouse to whom the taxpayer was required to make the payment at
the time the payment was made and throughout the remainder of the
year and the amount was paid under a decree, order or judgment of
a competent tribunal or under a written agreement;
[3] The Appellant and his wife
Catherine separated in January 1995. In February of that year,
the Appellant agreed to pay Catherine for her support and that of
their three children $1,500 monthly. He paid this amount for 11
months in 1995. In December 1995, Catherine petitioned him for
divorce, proposing that he pay $1,500 per month for her support
and that of their children. In the Appellant's Answer to the
Petition dated February 1996, he indicated that he contested only
the child support quantum. In March or April 1996, Catherine
hand-wrote a note in which she stated that the Appellant paid her
$750 in February 1995 and $1,500 for the months of March through
to December 1995 inclusive. Under these amounts, Catherine
wrote:
This is what I received from you and on my income tax I will
not claiming (sic) your part on the mortgage and truck payments
as child support from you.
The Appellant also signed the note.
[4] In August 1996, by interim order
of the Court of Queen's Bench, Family Division, the Appellant
was ordered to pay $900 per month to Catherine and the children.
Paragraph 2 of the Order provides that $5,100 had been paid by
the Appellant by way of periodic payments between January and
August 1996. The Order did not provide that the 1995 payments be
considered to have been paid.
[5] The position of the Appellant is
that a combination of Catherine's Petition for Divorce, his
Answer and Catherine's note together with the cancelled
cheques is sufficient to establish that there was no doubt that
the payments were made in 1995. Counsel for the Appellant
suggests that this is sufficient to establish that the 1995
payments were made pursuant to a written agreement. Only the 1996
payments were allowed as deductions by the Minister.
[6] The position of the Respondent is
that the 1995 payments were not made under a decree, order or
judgment of a competent tribunal pursuant to the requirements in
paragraph 60(b). The Court Order made in August 1996
contained no retroactivity provision of the type contemplated by
subsection 60.1(3) which states:
60.1(3) For the purposes of this section and section 60, where
a decree, order or judgment of a competent tribunal or a written
agreement made at any time in a taxation year provides that an
amount paid before that time and in the year or the preceding
taxation year is to be considered to have been paid and received
thereunder, the amount shall be deemed to have been paid
thereunder.
The question before me is whether the payments in 1995 were
made pursuant to a written agreement. Despite the able argument
of the counsel for the Appellant, the answer has to be no.
[7] While the Appellant is to be
commended for making the payments, the Act is clear. The
payments to be deductible must be made pursuant to a court order
or written agreement. I cannot construe the December 1995
Petition, the February 1996 Answer and the March or April note,
together with the oral agreement and the cheques, to form a
contract or written agreement envisioned by
paragraph 60(b). That paragraph provides that the
taxpayer must have been required to make the payment at the time
the payment was made and throughout the remainder of the year
under an order or written agreement. This was not the case. It
would be stretching the law of contracts beyond reason to accept
that there was an agreement in 1996, let alone in February 1995,
when the payments commenced.
[8] No matter how I may struggle to
find in the Appellant's favour, the various documents and
oral agreement cannot be held to be a written agreement. In
Foley v. The Queen, [2000] T.C.J. 485, Bowman J. referred
to the decision of R.S.W. Fordham, Q.C., of the Tax Review
Board in Kostiner v. M.N.R., 63 DTC 478 at 479 where he
stated:
The Board has held consistently that informal writings such as
correspondence and memoranda between a husband and wife, or
between their respective solicitors, will not be acceptable as
evidence of the right to deduct alimony or maintenance payments
from the payor's taxable income. The wording of section
11(1)(1) is reasonably clear and means just what it implies. It
contains no reference whatever to correspondence and other
informal writings.
Here we have an oral agreement in February, a Petition for
Divorce in 1995, an Answer to that Petition in February 1996
which appears to contest the amount claimed for alimony or
maintenance, and an acknowledgement of receipt of the monies by
Catherine in March or April 1996 as well as a Court Order in
August 1996 that does not incorporate the 1995 payments. All of
these disjointed documents fall far short of meeting the
requirements of paragraph 60(b) and the appeal is
dismissed.
Signed at Ottawa, Canada, this 9th day of November, 2000.
J.T.C.C.
COURT FILE
NO.:
1999-3131(IT)I
STYLE OF
CAUSE:
John Friesen and Her Majesty the Queen
PLACE OF
HEARING:
Winnipeg, Manitoba
DATE OF
HEARING:
August 23, 2000
REASONS FOR JUDGMENT BY: The Honourable
Judge C.H. McArthur
DATE OF
JUDGMENT:
August 31, 2000
APPEARANCES:
Counsel for the
Appellant: Bruce
D. Gregory
Agent for the
Respondent: Stacy
Cawley (Student-at-law)
COUNSEL OF RECORD:
For the Appellant:
Name:
Bruce D. Gregory
Firm:
Bruce D. Gregory
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
Email this Content