Kempo,
T.CJ.:—This
appeal
concerns
the
appellant's
1983
taxation
year.
The
issue
for
resolution
concerns
the
categorization
of
certain
monthly
payments
received
by
the
appellant
from
her
former
spouse
and
whether
they
were
to
be
on
account
of
maintenance
income
as
assessed
by
the
respondent
or
on
account
of
non-taxable
capital
payments
as
alleged
by
the
appellant.
Applicable
Legislation
The
respondent
had
reassessed
the
appellant
on
the
basis
of
paragraph
56(1)(b)
of
the
Income
Tax
Act
(the
"Act"),
the
applicable
parts
of
which
then
read
as
follows:
56.(1)
Without
restricting
the
generality
of
section
3,
there
shall
be
included
in
computing
the
income
of
a
taxpayer
for
a
taxation
year,
(b)
any
amount
received
by
the
taxpayer
in
the
year
.
.
.
pursuant
to
a
written
agreement
as
alimony
or
other
allowance
payable
on
a
periodic
basis
for
the
maintenance
of
the
recipient
thereof,
children
of
the
marriage,
or
both
the
recipient
and
children
of
the
marriage,
if
the
recipient
was
living
apart
from,
and
was
separated
pursuant
to
a
.
.
.
written
separation
agreement
from
the
spouse
or
former
spouse
required
to
make
the
payment
at
the
time
the
payment
was
received
and
throughout
the
remainder
of
the
year;
Subsection
56.1
of
the
Act
was
also
referred
to
in
argument.
It
provided
that:
56.1
Where,
after
May
6,
1974
a
.
.
.
written
agreement
described
in
paragraph
56(1)(b)
.
.
.
or
any
variation
thereof,
has
been
made
providing
for
the
periodic
payment
of
an
amount
to
the
taxpayer
by
his
spouse
or
former
spouse
or
for
the
benefit
of
the
taxpayer
or
children
of
the
marriage
in
the
custody
of
the
taxpayer,
the
amount
or
any
part
thereof,
when
paid,
shall
be
deemed
to
have
been
paid
to
and
received
by
the
taxpayer
if
the
taxpayer
was
living
apart
from
the
spouse
or
former
spouse
at
the
time
the
amount
was
paid
and
throughout
the
remainder
of
the
year
in
which
the
amount
was
paid.
Facts
The
appellant
had
been
married
to
one
Ernest
Carl
Boychuk
(hereafter
referred
to
as
the
“former
spouse”)
and
following
their
divorce
in
1983
she
commenced
to
use
her
maiden
surname.
At
the
time
of
their
separation,
which
happened
in
1980,
the
appellant
and
her
former
spouse
were
joint
owners
of
their
matrimonial
home
and
lake
cottage.
The
appellant
testified
that
settlement
negotiations
respecting
maintenance
and
the
properties
were
anything
but
amiable,
that
her
former
spouse
approached
the
whole
matter
in
a
very
business-like
manner
and
that
he
steadfastly
took
the
position
that
he
would
never
give
over
to
her
his
one-half
interest
in
either
of
the
two
properties.
On
separation
there
were
five
children
of
the
marriage.
Their
eldest
child,
Christopher,
was
then
21
years
old.
He
had
completed
his
Arts
degree
and
had
decided
to
work
for
the
following
year
before
entering
law
school
in
fall
of
1981.
He
said
he
then
obtained
his
law
degree
in
the
spring
of
1982
[sic?]
and
took
another
year
off
to
work
in
Regina.
At
all
times
material
Christopher
had
not
been
considered
a
child
under
the
provisions
of
the
Divorce
Act
(Can.)
and
no
maintenance
provisions
had
been
made
for
his
benefit
under
either
of
the
written
separation
agreements
made
between
the
appellant
and
her
former
spouse.
The
next
eldest
son,
Daryl,
was
20
years
old
at
the
time
of
separation.
He
had
just
completed
his
high
school
and
was
playing
junior
hockey
and
working
part-time.
Although
he
eventually
returned
to
school,
no
maintenance
provisions
had
been
made
for
him
in
the
separation
agreements
because
he
was
working
at
the
material
times
and
he
then
married.
The
three
remaining
children,
Phillip,
Terry
and
Mary
Anne
were
aged
18
years,
16
years
and
14
years
respectively
at
the
time
of
separation
in
1980.
At
all
material
times
they
were
dependent
children
in
the
appellant's
sole
care
and
custody
following
the
separation.
The
evidence
confirmed
that
these
three
were
the
only
children
provided
for
under
the
maintenance
terms
of
the
separation
agreements.
The
material
portions
of
the
first
separation
agreement
(Exhibit
A-1)
effective
as
of
July
1,
1980,
state:
And
Whereas
each
of
the
Husband
and
the
Wife
desires
to
settle,
by
agreement,
all
rights,
claims,
demands
and
causes
of
action
which
each
has
or
may
have
against
the
other
with
respect
to
any
rights,
either
or
each
of
them
may
have
to
alimony,
maintenance
or
support
from
the
other
with
respect
to
their
property,
both
real
and
personal;
Now
Therefore
This
Agreement
Witnesseth
that
in
consideration
of
the
premises
and
mutual
covenants
herein
contained,
the
Husband
and
the
Wife
agree
as
follows:
5.
Maintenance:
The
Husband
shall
pay
to
the
Wife,
for
the
support
and
maintenance
of
herself
and
the
said
Children
the
following
sums:
(a)
The
sum
of
Two
Thousand,
Six
Hundred
and
Sixty
($2,660.00)
Dollars
for
the
month
of
July,
A.D.
1980;
(b)
The
sum
of
One
Thousand,
Five
Hundred
($1,500.00)
Dollars
per
month
commencing
on
the
1st
day
of
August,
A.D.
1980,
and
to
continue
from
the
1st
day
of
each
and
every
month
thereafter
up
to
and
including
the
1st
day
of
June,
A.D.
1982,
after
which
time
the
Wife
shall
make
provision
for
the
support
and
maintenance
of
herself.
(c)
The
sum
of
Six
Hundred
($600.00)
Dollars
per
month
plus
one-half
of
the
mortgage
payment
which
for
the
purpose
of
this
Agreement
shall
include
principal,
interest
and
taxes
commencing
on
the
1st
day
of
July,
A.D.
1982,
and
to
continue
until
such
time
as
all
of
the
Children
have
completed
their
education.
The
Wife
shall
be
responsible
for
any
income
tax
payable
on
any
monies
paid
to
her
by
the
husband
pursuant
to
paragraphs
(a),
(b)
and
(c)
above.
6.
Real
Property:
(a)
The
Husband
and
Wife
agree
that
the
wife
shall
be
entitled
to
the
exclusive
possession
of
the
matrimonial
residence
at
.
.
.
for
her
benefit
and
the
benefit
of
the
infant
Children
until
all
of
the
Children
have
completed
their
education;
The
Wife
shall,
from
the
maintenance
amount
provided,
pay
for
the
maintenance,
mortgage,
taxes
and
all
utilities
for
the
matrimonial
home;
When
all
of
the
Children
have
completed
their
education
the
said
matrimonial
residence
shall
be
sold
and
the
net
proceeds
from
the
sale
shall
be
divided
equally
between
the
parties;
(b)
The
Husband
and
the
Wife
are
also
the
joint
owners
of
a
cabin
at
.
.
.
.
The
Husband
and
the
Wife
agree
that
the
said
cabin
shall
be
sold
at
the
best
price
obtainable
on
or
before
the
1st
day
of
July,
A.D.
1981
.
.
..
Until
the
said
cabin
has
been
sold,
as
aforesaid,
it
shall
be
maintained
by
the
wife
for
the
joint
use
of
the
Husband
and
the
Wife.
If
the
Wife
desires
to
purchase
the
Husband's
interest
in
the
said
cabin
it
shall
be
purchased
by
her
at
and
for
the
fair
market
value
of
the
cabin
as
determined
in
the
months
of
April,
May
or
June
1981,
as
the
case
may
be;
the
Wife
shall
have
the
first
option
to
buy
or
the
first
right
of
refusal.
The
appellant
had
considered
and
had
reported
all
of
the
payments
received
during
1980,
1981
and
part
of
1982
as
maintenance
income
because
it
was
all-inclusive
and
was
made
while
she
was
entitled
to
support.
However,
once
her
entitlement
to
support
and
maintenance
had
ceased
after
June
1,
1982
(by
clause
5(b)
of
the
agreement)
she
understood
that
the
mortgage
payments
thereafter
received
by
her
under
clause
5(c)
would
no
longer
be
on
account
of
maintenance.
Put
another
way,
after
June
1,
1982,
the
appellant
was
to
have
been
self-supporting
and
as
such
she
was
to
have
been
responsible
for
one-half
of
the
mortgage
payments,
and
the
other
one-half
that
her
former
spouse
(still
being
a
joint
owner)
was
paying
to
her
was
to
be
on
account
of
his
one-half
ownership
of
the
property
pending
its
sale.
Monthly
amounts
for
the
total
mortgage
payments
had
been
made
by
the
appellant
giving
12
postdated
cheques
to
the
mortgagee
for
the
full
amount.
The
appellant
had
exclusive
possession
under
certain
conditions,
however
she
said
that
the
house
had
to
be
sold
and
the
proceeds
divided
as
called
for
under
clause
6(a)
of
the
agreement.
The
appellant's
solicitor
caused
the
following
letter
dated
September
23,
1982,
(Exhibit
A-3)
to
be
sent
to
Revenue
Canada,
Taxation:
Re:
Grace
Jasper
(Boychuk)
Please
be
advised
the
writer
acts
on
behalf
of
Grace
Jasper
(Boychuk).
She
entered
into
a
Separation
Agreement
with
her
husband
in
1980
with
certain
maintenance
provision
as
set
out
in
paragraph
5
on
page
3
of
the
Agreement
a
photocopy
of
which
is
enclosed
herewith.
As
you
will
note
paragraph
5(c)
which
is
now
in
effect
provides
that
Mr.
Boychuk
pay
$600.00
per
month
plus
one-half
of
the
mortgage
payments
which
for
the
purpose
of
the
agreement
include
principal,
interest
and
taxes
such
payments
to
commence
on
the
1st
day
of
July
of
1982.
There
is
addendum
that
the
wife
will
be
responsible
for
any
income
tax
payable
and
any
monies
paid
to
her
by
the
husband
pursuant
to
5(a),
(b)
and
(c)
however
we
are
taking
the
position
that
under
the
Income
Tax
Act
this
clause
only
reaffirms
the
provisions
of
the
Act.
House
payments
and
in
more
particular
the
one-half
of
the
mortgage
payments
which
include
principal,
interest
and
taxes
under
The
Income
Tax
Act
are
not
classified
as
maintenance
and
hence
Ms.
Jasper
will
be
only
including
the
$600.00
per
month
in
her
personal
income
tax.
I
would
appreciate
your
confirmation
that
this
is
acceptable
at
your
very
earliest
convenience.
The
written
response
(Exhibit
A-4)
was
from
the
Correspondence
Unit,
Assessing
Division
of
Revenue
Canada,
Taxation,
by
the
Director
of
the
Winnipeg
Taxation
Centre,
dated
October
12,
1982
thusly:
Re:
1982
Income
Tax
Return
Grace
Jasper
(Boychuk)
The
information
you
requested
is
as
follows:
This
will
serve
to
confirm
that
Ms.
Jasper
will
be
required
to
report
only
the
specified
$600
per
month
in
maintenance
payments
inasmuch
as
the
"one
half
of
the
mortgage
payment.
.
.”
is
not
deemed
to
be
"maintenance".
We
trust
this
information
is
satisfactory.
The
appellant
was
unable
to
recall
what
triggered
the
need
for
the
aforementioned
correspondence
with
Revenue
Canada,
and
the
Court
was
not
enlightened
as
to
any
particular
reasons
therefor.
In
any
event
there
was
no
inferential
evidence
that
it
had
occurred
during
a
time
when
the
appellant
and
her
former
spouse
were
contemplating
or
negotiating
any
further
agreement.
This
latter
matter
did
arise,
however,
some
time
in
the
first
half
of
1983
when
the
former
spouse
was
seeking
the
appellant's
co-operation
in
gaining
an
immediate
decree
absolute
to
facilitate
plans
for
his
imminent
remarriage.
Her
response
was
a
request
for
a
transfer
to
her
of
his
one-half
interest
in
the
matrimonial
home.
He
refused,
and
the
matter
was
resolved
by
both
parties
giving
up
their
respective
joint
interests
with
execution
of
conveyances
as
of
September
1,
1983,
in
favour
of
the
appellant
and
the
five
children
of
the
marriage
all
as
joint
tenants.
Thereafter
the
former
spouse
had
retained
no
interest
and
the
appellant's
had
been
reduced
to
one-sixth.
A
written
amending
agreement
had
been
entered
into
dated
June
23,
1983,
the
material
portions
being
as
follows:
And
Whereas
an
Agreement
was
entered
into
effective
on
the
1st
day
of
July,
A.D.
1980,
in
writing
between
the
parties
which
Agreement
was
intended
by
the
parties
to
settle
amongst
other
things
maintenance
payments
and
other
related
matters
as
well
as
matrimonial
property;
And
Whereas
the
Husband
and
Wife
wish
to
make
certain
amendments
to
the
Agreement
effective
the
1st
day
of
July,
A.D.
1980;
Now
Therefore
This
Agreement
Witnesseth
that
in
consideration
of
the
premises,
mutual
covenants,
promises,
undertakings
and
agreements
hereinafter
contained,
the
Husband
and
Wife
do
mutually
covenant,
undertake
and
agree
with
each
other
as
follows:
(a)
Paragraphs
5(c),
6(a)
of
the
Agreement
entered
into
between
the
parties
on
the
1st
day
of
July,
A.D.
1980,
shall
be
deleted
and
the
following
provisions
shall
apply;
1(a).
The
Husband
shall
pay
to
the
Wife,
for
the
support
and
maintenance
the
sum
of
Eight
Hundred
($800.00)
Dollars
per
month
and
such
payments
to
continue
as
long
as
the
Children
are
Children
within
the
meaning
of
The
Divorce
Act
and
while
any
of
the
said
Children
are
attending
at
a
full
time
educational
facility
however
return
to
reside
with
the
Wife
during
the
summer
they
shall
continue
to
be
Children
within
the
meaning
of
this
Agreement.
Provided,
however,
that
upon
any
Child
leaving
home
the
monthly
payment
shall
be
reduced
by
Two
Hundred
($200.00)
Dollars
per
month
for
each
Child
and
upon
the
last
Child
leaving
home,
all
liabilities
for
any
payment
whatsoever
shall
automatically
cease.
1(b).
The
Husband
shall
continue
to
pay
one-half
of
the
mortgage
payment
which
for
the
purpose
of
this
Agreement
shall
include
principal,
interest
and
taxes
such
payments
to
commence
on
the
1st
day
of
July,
A.D.
1983,
and
the
first
of
each
and
every
month
thereafter
and
to
continue
on
the
first
of
each
and
every
month
thereafter
until
the
last
Child
has
completed
his
or
her
education
and
has
left
the
family
home.
2.
The
Husband
agrees
to
execute
and
transfer
the
property
described
in
clause
6(a)
of
the
Agreement
in
favour
of
Grace
Irene
Jasper,
Christopher
Boychuk,
Daryl
Boychuk,
Philip
Boychuk,
Terry
Boychuk
and
Marianne
Boychuk,
as
joint
tenants
and
not
as
tenants
in
common
and
further
agrees
that
he
shall
have
no
further
claim
in
and
to
the
said
property.
It
is
further
agreed
that
the
transfer
shall
not
be
registered,
but
shall
be
held
in
trust
and
delivered
to
the
Wife
upon
the
issuance
of
a
Decree
Absolute
for
divorce.
5.
The
amendments
provided
in
this
Agreement
shall
become
effective
upon
the
issuance
of
the
Decree
Absolute
for
divorce.
6.
In
all
other
respects
the
contents
of
the
Agreement
effective
the
1st
day
of
July,
A.D.
1980,
are
hereby
ratified
and
confirmed.
When
the
amending
agreement
was
signed
in
June
the
three
youngest
children
were
then
living
at
home.
By
September
there
were
two.
No
explanation
was
offered
as
to
why
the
$600
per
month
had
been
increased
to
$800
per
month
nor
why,
upon
one
child
having
left
by
September
the
payment
fell
from
$800
to
$400
rather
than
by
only
$200
as
called
for
in
the
Agreement.
In
any
event,
according
to
the
appellant's
testimony,
what
she
had
received
pursuant
to
the
agreement
in
1983
was
the
$600
for
maintenance
and
$322
for
mortgage
payments
for
each
of
the
months
of
January
to
June
inclusive,
an
amount
of
$63.05
for
a
property
tax
adjustment
in
July,
the
$800
for
maintenance
and
$337
for
mortgage
payments
for
each
of
July
and
August,
and
then
$400
plus
the
$337
mortgage
payment
for
each
of
September
to
December
inclusive.
What
she
had
reported
in
her
1983
tax
return
as
maintenance
excluded
all
amounts
received
respecting
the
mortgage
payments
and
the
tax
adjustment.
The
Appellant's
Position
The
submissions
were
that:
(a)
up
to
July
1,
1982
the
bulk
payments,
which
included
the
mortgage
payments,
were
maintenance
for
the
Appellant
and
the
three
children;
(b)
thereafter,
and
once
she
was
contractually
not
entitled
to
support
and
maintenance,
the
mortgage
payments
were
made
by
the
former
spouse
in
respect
of
and
to
preserve
and
enhance
his
own
interest
or
equity
in
a
capital
property
which
he
intended
to
be
sold
and
the
proceeds
divided
once
the
children
had
left
home
and
that
the
Appellant
had
no
unfettered
discretion
or
control
as
to
where
these
monies
were
to
be
applied;
(c)
upon
the
title
change
on
September
1,
1983,
the
basic
situation
was
the
same
in
that
the
mortgage
payment
had
to
go
towards
the
house
mortgage,
that
she
was
fully
accountable
to
her
children
therefor,
that
her
half
of
the
mortgage
payments
and
her
former
spouse's
half
were
also
going
to
the
benefit
of
their
two
adult
children
and
that
these
mortgage
payments
were
with
respect
to
a
capital
asset
over
which
she
had
no
control;
(d)
the
separation
of
the
amounts
earmarked
for
maintenance
and
for
mortgage
payments
indicated
and
confirmed
that
separate
and
distinct
characteristics
and
treatment
were
intended
notwithstanding
the
loosely
drafted
language
used
in
the
opening
words
of
paragraph
5
of
the
original
Agreement;
and
that
(e)
the
former
spouse's
agreement
to
continue
making
the
mortgage
payment
was
made
in
relation
to
and
concurrently
with
divestiture
of
his
interest
in
the
property.
It
was
part
and
parcel
of
the
whole
arrangement
involving
ownership
and
maintenance
of
a
capital
asset
over
which
the
Appellant
had
had
no
control.
The
appellant
relied
upon
the
decision
of
the
Tax
Review
Board
in
Harry
Goldenburg
v.
M.N.R.,
[1979]
C.T.C.
3082;
79
D.T.C.
851.
The
Respondent's
Position
The
submissions
were
that:
(a)
all
of
the
criteria
of
paragraph
56(1)(b)
of
the
Act
were
satisfied
save
and
except
whether
the
mortgage
amount
had
been
paid
as
alimony
or
other
allowance
payable
for
the
maintenance
of
the
recipient,
the
children
of
the
marriage,
both;
(b)
the
mortgage
payments
were
allowances
to
enable
the
Appellant
to
discharge
a
certain
kind
of
expense
which
was
home
related;
(c)
paragraph
5(c)
of
the
original
Agreement
defined
both
the
monthly
amount
and
the
mortgage
payment
"as
maintenance"
and
that
is
how
the
parties
viewed
it;
(d)
the
mortgage
amount
was
paid
as
a
result
of
the
Appellant's
need
by
virtue
of
her
status
as
a
mother.
It
relieved
her
of
a
financial
burden
in
being
able
to
maintain,
for
herself
and
her
children,
an
unaltered
standard
of
living
and
it
thereby
conferred
a
benefit
on
her:
viz:
Gagnon
v.
The
Queen
(infra);
(e)
the
fettering
of
any
discretion
as
to
where
the
mortgage
monies
were
to
go
makes
the
payment
no
less
an
allowance
so
long
as
there
was
a
benefit
resulting
from
the
payment
of
the
former
spouse
to
the
Appellant:
viz:
Gagnon
v.
The
Queen
(infra)
at
6184;
and
(f)
from
the
above
perspective,
ownership
of
the
home
and
motive
are
irrelevant.
The
respondent
relied
upon
the
Supreme
Court
of
Canada
decision
in
Gagnon
v.
The
Queen,
[1986]
1
C.T.C.
410;
86
D.T.C.
6179
(S.C.C.).
Analysis
Goldenburg
v.
M.N.R.,
supra,
was
a
case
which
dealt
directly
with
the
question
of
whether
mortgage
payments
were
in
the
nature
of
capital
or
as
on
account
of
alimony
or
maintenance
allowances.
The
facts
of
the
case
and
decision
were
succinctly
stated
in
the
headnote:
The
taxpayer's
divorce
decree,
obtained
in
May
of
1976,
ordered
him
to
transfer
a
home
into
his
wife's
name
and
thereafter
to
make
all
mortgage
payments
on
the
house
until
the
mortgage
was
discharged.
Title
to
the
home
was
transferred
and
in
1977
the
taxpayer
made
certain
monthly
payments
on
the
mortgage
and
then
a
final
lump
sum
payment
to
discharge
the
mortgage.
He
claimed
a
deduction
for
both
the
monthly
and
lump
sum
payments
as
alimony
or
maintenance.
The
Minister
disallowed
the
deduction
on
the
ground
that
the
payments
were
not
alimony
payments
or
other
allowances
deductible
under
the
relevant
provisions.
The
taxpayer
appealed
to
the
Tax
Review
Board.
Held:
The
taxpayer's
appeal
was
dismissed.
The
Board
decided
that
neither
the
monthly
mortgage
payments
nor
the
lump
sum
payment
was
deductible
as
alimony
or
maintenance
in
the
sense
of
being
for
the
support
and
maintenance
of
the
taxpayer's
spouse.
The
benefits
received
by
the
taxpayer's
spouse
as
a
result
of
the
payments
were
not
alimony
or
maintenance
allowances
but
were
in
the
nature
of
capital
assets.
The
relevant
statutory
provisions
did
not
encompass
the
concept
of
deductibility
where
capital
assets
were
transferred
to
the
spouse.
The
taxpayer's
appeal
was
therefore
dismissed.
The
Board,
after
reviewing
both
The
Queen
v.
Morton
Pascoe,
[1975]
C.T.C.
656;
75
D.T.C.
5427
(F.C.A.),
and
The
Attorney-General
of
Canada
v.
Weaver,
et
al.,
[1975]
C.T.C.
646;
75
D.T.C.
5462
(F.C.A.)
dealing
with
the
meaning
of
“allowance”,
had
this
to
say
at
page
3085
(D.T.C.
853):
The
concept
of
alimony
and
maintenance
payments,
as
set
out
in
paragraphs
60(b)
and
(c)
and
as
interpreted
by
the
Courts
over
the
years,
involves
more
than
the
periodicity
of
the
payments
ordered
by
the
Courts
or
agreed
to
by
the
parties
to
a
written
separation
agreement.
The
nature
of
the
payments
must
be
for
the
support
and
maintenance
of
the
spouse
as
those
words
are
generally
understood.
The
nature
of
the
“benefit”
referred
to
in
section
60.1,
as
I
interpret
that
section,
is
related
and
limited
to
the
support
and
maintenance
of
the
spouse
and
would
not
include
gifts
or
transfer
of
capital
assets
by
the
taxpayer
to
his
spouse
even
though
ordered
by
the
Court
or
agreed
to
in
a
written
separation
agreement.
The
Court
order
or
a
written
separation
agreement
might
well,
as
in
the
instant
appeal,
specify
that
payments,
even
periodic
payments,
be
made
by
the
taxpayer
to
his
spouse
which,
though
a
benefit
to
the
spouse,
are
not
maintenance
allowances
but
are
in
the
nature
of
capital
assets
and,
in
my
opinion,
not
meant
by
Parliament
to
fall
within
the
meaning
of
paragraphs
60(b)
and
(c),
and
section
60.1.
The
transfer
by
the
appellant
of
title
to
the
matrimonial
home
to
his
spouse,
the
mortgage
on
which
was
subsequently
totally
discharged,
is
over
and
above
what
is
generally
understood
by
alimony
and
maintenance
payments
made
for
the
support
of
the
spouse
and
children.
Such
payments
are,
in
my
view,
special
provisions
of
a
capital
nature
made
by
the
parties,
not
for
the
maintenance
of
the
spouse,
but
as
the
price
of
a
settlement,
or
of
damages
or
the
conditions
on
which
a
legal
separation
would
be
agreed
to.
[Emphasis
added.]
The
facts
of
the
Goldenberg
case
were
somewhat
different
from
those
at
bar
in
that
that
taxpayer
not
only
had
to
transfer
the
matrimonial
home
to
his
spouse
but
he
was
also
obliged
to
retire
the
mortgage
completely.
Obviously
the
effect
of
the
order
would
be
to
ensure
a
debt-free
home
to
the
recipient.
The
capital
aspect
of
the
benefit
was
thereby
more
readily
identifiable.
In
Gagnon
v.
The
Queen,
supra,
the
matrimonial
home
became
the
property
of
the
wife
following
the
dissolution
of
the
community.
By
judgment
of
divorce
it
was
determined
that
the
taxpayer
was
to
pay
his
wife
a
certain
monthly
amount
as
alimentary
pension
for
herself
and
her
children
and
further
that,
for
her
benefit,
he
was
also
to
pay
to
her
the
monthly
amounts
representing
the
principal
and
interest
payments
on
the
mortgages
on
the
home
and
the
property
taxes.
The
Court
noted
in
its
analysis
of
the
trial
judgment
the
observations
of
Walsh,
J.
that
for
various
reasons
the
obligation
upon
the
taxpayer
to
make
mortgage
payments
would
have
been
changeable
under
changing
circumstances
and
the
fact
that
the
property
belonged
solely
to
the
recipient
spouse
bore
emphasizing.
The
facts
here
have
some
similarities
to
both
Goldenburg
and
Gagnon.
However
there
are
also
significant
differences
in
that
originally
the
appellant's
joint
interest
in
the
matrimonial
home
had
to
be
sold
when
the
children
had
completed
their
education,
that
during
this
period
the
former
spouse
was
obliged
to
make
his
one-half
of
the
mortgage
payments,
and
that
by
way
of
further
negotiation
and
settlement,
the
property
interests
were
dramatically
altered
whereby
the
former
spouse
no
longer
had
any
interest
and
the
appellant's
interest
had
been
reduced
to
one-sixth.
I
do
not
agree
that
Gagnon
supports
the
approach
taken
by
respondent's
counsel
that
the
motives
of
the
appellant
and
her
former
spouse
and
their
ownership
interests
in
the
property
would
be
irrelevant,
and
that
once
any
kind
of
benefit
was
found
to
have
been
enjoyed
by
the
recipient
from
the
mortgage
payments
that
that
would
be
the
end
of
the
whole
matter.
It
is
correct
that
for
there
to
be
an
“allowance”
there
must
be
a
benefit.
However,
Gagnon
is
not
authority
for
the
proposition
that
any
kind
of
benefit
enjoyed
would
necessarily
mean
that
it
was
for
the
purposes
of
or
in
respect
of
maintenance.
It
did
not
deal
directly
with
the
issue
at
hand.
In
my
view,
the
ratio
of
Gagnon
does
not
overrule
Goldenburg
when
the
very
characterization
of
the
payment
as
being
capital
or
income
is
directly
in
issue.
Gagnon
is
authority
for
the
principle
that
matters
of
control
over
the
ultimate
destination
of
the
payments
make
it
no
less
an
allowance
when
in
the
process
a
discernible
benefit
has
been
enjoyed
by
the
recipient.
However
it
is
obvious
that
the
benefit
enjoyed
by
this
appellant
of
having
been
relieved
of
paying
the
whole
amount
of
the
mortgage
payments
could
emanate
equally
from
a
capital-type
payment.
In
McKimmon
v.
The
Queen,
[1988]
2
C.T.C.
71
at
75;
88
D.T.C.
6296
(F.C.T.D.)
at
6299
Collier,
J.
approached
the
resolution
of
whether
the
pay-
merits
were
on
account
of
a
capital
lump-sum
on
the
one
hand,
or
on
account
of
maintenance
payable
on
a
periodic
basis
on
the
other
hand,
by
construing
the
payments
“in
light
of
the
whole
Agreement"
in
arriving
at
a
determination
as
to
its
"primary
purpose".
Viewing
the
matter
in
its
entire
context,
I
am
satisfied
that
the
appellant
has
established,
on
the
balance
of
probabilities,
that
the
mortgage
payments
received
during
the
first
part
of
1983
were
on
account
of
capital
in
that
their
essential
and
overriding
purpose
up
to
July
1,
1983,
was
to
enhance,
protect
and
preserve
the
payor's
interests
in
the
capital
property
which
he
had
intended
to
recoup
and
benefit
by
on
its
sale
at
a
time
certain.
The
1983
renegotiation
was
in
the
context
of
(to
use
the
words
of
the
Board
in
Goldenburg,
supra,
at
3085
(D.T.C.
853)
“special
provisions
of
a
capital
nature
made
by
the
parties,
not
for
the
maintenance
of
the
spouse,
but
as
the
price
of
a
settlement
.
.
.
or
the
conditions
on
which
a
legal
separation
would
be
agreed
to".
Thereafter
the
essential
and
primary
purpose
of
the
mortgage
payments
during
the
period
in
which
they
were
obliged
to
have
been
made
were
received
by
the
appellant
for
the
enhancement,
preservation
and
protection
of
a
capital
property
for
the
sole
benefit
of,
in
its
capital
sense,
all
of
the
five
children
of
the
marriage
which
included
two
adults.
Accordingly,
the
capital
element
of
the
payments
was
unchanged
throughout
1983
in
that
the
capital
property
the
former
spouse
sought
to
preserve
for
his
own
benefit
was
given
up
only
on
the
condition
that
his
interest
and
a
significant
part
of
the
appellant's
interest
would
go
to
all
of
the
children.
When
viewed
globally
and
realistically,
the
overriding
capital
context
becomes
clear
and
is
ultimately
persuasive.
For
these
reasons
the
appeal
is
to
be
allowed,
with
costs,
and
the
matter
referred
back
to
the
respondent
for
reconsideration
and
reassessment
on
the
basis
that
the
appellant
had
received
the
amount
of
$6,800
as
alimony
or
maintenance
income
in
the
year
pursuant
to
paragraph
56(1)(b)
of
the
Act
and
not
the
amount
of
$10,968.84
as
assessed.
Appeal
allowed.
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