Docket: A-290-14
Citation:
2015 FCA 255
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CORAM:
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DAWSON J.A.
RYER J.A.
WEBB J.A.
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BETWEEN:
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NICHOLAS MILLS
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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 OF THE COURT
(Delivered from the Bench at Toronto, Ontario, on
November 16, 2015)
DAWSON J.A.
[1]
The Minister of National Revenue reassessed the
appellant in relation to the 2011 taxation year to disallow the deduction from
income of legal expenses incurred by the appellant in the amount of $42,283.24.
The appellant incurred the legal expenses in an effort to have his former
spouse contribute towards child support.
[2]
For reasons cited as 2014 TCC 153 a deputy judge
of the Tax Court of Canada dismissed the appellant’s appeal from the
reassessment. This is an appeal from the judgment of the Tax Court.
[3]
Paragraph 18(1)(a) of the Income Tax
Act, R.S.C. 1985, c. 1 (5th Supp.) provides that when computing
the income of a taxpayer from a business or property, no deduction shall be
made in respect of an expense, except to the extent the expense was made or
incurred by the taxpayer for the purpose of gaining or producing income from
business or property.
[4]
The case law is well-settled that expenses
incurred by the payer of child support to prevent the support from being
established or increased, or to decrease or terminate the support, are not
incurred for the purpose of earning income. Such expenses cannot, therefore, be
deducted from income (see, for example, Nadeau v. Minister of National
Revenue, 2003 FCA 400, [2004] 1 F.C.R. 587).
[5]
The Deputy Judge made no error in the
application of the law to the facts before him. Nor did the Judge make any
palpable and overriding error in his appreciation of the evidence.
[6]
The appellant argues that he incurred the legal
expenses not for the purpose of reducing his child support obligations, but
rather to establish his right to receive child support from his former spouse.
However, at paragraph 22 of his reasons, the deputy Judge rejected this
characterization of the purpose of the legal proceeding, finding that the
effect of the appellant’s application, if successful, would have been to reduce
the appellant’s child support obligations.
The deputy
Judge’s characterization of the second proceeding before the Ontario Superior
Court of Justice was supported by the following evidence given by the appellant
in cross-examination:
Q. And from what we have heard so far
today, you were seeking to vary the terms of the 2008 order, is that correct?
A. That’s correct. Because there’s no
other way to -- this is the Court’s language, right, this is the law’s
language. You have to -- it’s a motion to vary.
Q. That’s right.
A. You can’t have a motion to show
the Court that the ex-spouse has an obligation to pay you child support. It’s a
motion to vary.
Q. Right. And as we have just heard
from you, the only support obligations set out in the 2008 order were owed by
you, were they not?
A. That’s correct.
[7]
If follows that the appeal will be dismissed
with costs.
“Eleanor R. Dawson”
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