Guardo v. Ministre Du Revenu National, [1999] 2 CTC 187, [1999] DTC 5150

Pinard J.:

This is an appeal from a decision of the Tax Court of Canada, dated January 8, 1991. [1] The plaintiff claims a deduction of $5,200 per year for maintenance payments for the 1986 and 1987 taxation years.

The following facts are not in dispute:

• the plaintiff has been divorced from Claire Leduc since January 19, 1973;

• from 1973 to April 1983, the plaintiff made maintenance payments to Claire Leduc, his former spouse, for the benefit of their son, Laurent Guardo, born on June 20, 1964;

• from 1983 to 1988, the plaintiff made maintenance payments of $100 per week directly to his son, Laurent Guardo, thereby complying with a Superior Court judgment dated April 22, 1983;

° in 1986 and 1987, Laurent Guardo was of the age of majority, of sound mind and in the legal custody of neither his father nor his mother.

At the hearing before me, it being a trial de nova, the plaintiff made a point of explaining paragraph 10 of his Statement of Claim, which reads:

[TRANSLATION I

0. Since July 1985, Laurent Guardo has been living with neither his mother nor his father, the appellant;

Although paragraph 10 was admitted in the defendant’s Statement of Defence, the plaintiff testified to say that even though his son Laurent had his own apartment near the Université de Montréal during the taxation years in question, he nevertheless kept a key to his mother’s home, where he still had his own room. He added that although the weekly $100 maintenance cheques were made out to his son Laurent, they were sent to his mother’s address. Indeed, Laurent Guardo, whom the plaintiff had testify, confirmed that in 1986 and 1987 he continued to visit his mother regularly and had his mail sent to her address. It was also established that his mother occasionally loaned him her car and washed his clothes. However, for practical reasons, Laurent Guardo chose to live near the Université, in his own apartment, which he kept from 1985 to 1989, when he bought his own house. Laurent Guardo, born on June 20, 1964, attained the age of majority on June 20, 1982.

The provisions relevant to the dispute are the following sections of the Income Tax Act, S.C. 1970-71-72, c. 63 (the Act):

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

(b) an amount paid by the taxpayer in the year, pursuant to a decree, order or judgment of a competent tribunal or 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 he was living apart from, and was separated pursuant to a divorce, judicial separation or written separation agreement from, his spouse or former spouse to whom he was required to make the payment at the time the payment was made and throughout the remainder of the year;

60. Peuvent être déduites lors du calcul du revenu d’un contribuable pour une année d'imposition les sommes suivantes qui sont approprées:

b) toute somme payée dans l’année par le contribuable, en vertu d’un arrêt, d’une ordonnance ou d’un jugement rendus par un tribunal compétent ou en vertu d’un accord écrit, à titre de pension alimentaire ou autre allocation payable périodiquement pour subvenir aux besoins du bénéficiaire, des enfants issus du mariage ou à la fois du bénéficiaire et des enfants issus du manage, si le contribuable vivait séparé, en vertu d’un divorce, d’une séparation judiciaire ou d’un accord de separation, du conjoint ou de l’exconjoint à qui il était tenu de faire le paiement, le jour où le paiement a été effectué et durant le reste de l’année;

60.1 (1) Where, after May 6, 1974, a decree, order, judgment or written agreement described in paragraph 60(b), (c) or (c.1), or any variation thereof, has been made providing for the periodic payment of an amount by a taxpayer to or for the benefit of a person who is his spouse, former spouse, or, where the amount was paid pursuant to an order made in accordance with the laws of a province, an individual within a prescribed class of persons described in the laws of the province, or for the benefit of children in the custody of such a person, the amount or any part thereof, when paid, shall be deemed, for the purposes of paragraphs 60(b), (c) and (c.1), to have been paid to and received by that person if, at the time the payment was received and throughout the remainder of the year in which the payment was received, the taxpayer was living apart from that person.

60.1 (1) Quand, après le 6 mai 1974, il est intervenu un arrêt, une ordonnance, un jugement ou un accord écrit visé; à l’alinéa 60b), c) ou c./), ou une modification s’y rattachant, prévoyant le versement périodique d’une certaine somme, par un contribuable, a une personne, ou au profit de celle-ci, qui est son conjoint, son ancien conjoint, ou, lorsque la somme a été versée en vertu d’une ordonnance établie conformément aux lois d’une province, un particulier appartenant à cette catégorie prescrite de personnes prévue dans la loi de cette province ou au profit des enfants dent la garde est confiée à une telle personne, cette somme ou une fraction de celle-ci, lorsque payée, est réputée, aux fins des alinéas 60/?), c) et c./), avoir été payée et reçue par cette personne si, à la date du paiement et jusqu’à la fin de l’année le paiement a été reçu, le contribuable vivait séparé de cette personne.

The only issue in dispute is whether the maintenance payments to Laurent Guardo are amounts paid for the benefit of a child in the custody of the plaintiff s former spouse under subsection 60.1(1) of the Act.

In The Queen v. Curzi (1994), 80 F.T.R. 64, a case that expressly endorsed the Tax Court of Canada judgment that is the subject of this appeal, my brother Mr. Justice Noel said:

... he question raised by this case is therefore whether, in the circumstances, Stéphane was still in his mother’s custody at the time he received the amounts in question.

Decision

This question resulted in a number of inconsistent decisions in the Tax Court of Canada, including the decision which is the subject of this appeal.

Lamarre Proulx J.T.C.C. referred to this debate, and at the same time put an end to it, in my view, in Guardo v. Minister of National Revenue (89-1660 (IT)), January 8, 1991.

The concept of “garde” or “custody” evokes quite another thing. In a divorce, either of the former spouses may be granted custody of the children. A custody order confers a right on the parent who is granted custody. It is the parent who has custody of the children who has ultimate responsibility for the upbringing of the children and for exercising parental authority. On the other hand, a custody order carries with it all of the duties attaching to custody.

However, the right of custody is not perpetual and a custody order could not be t up against an emancipated adult child who voluntarily chooses to withdraw from parental authority. The fact that a child may, in such circumstances, still be a child of the marriage because, having left the parental home. he or she cannot provide for his or her ow needs does not mean that the child remains in the custody of the parent whom he or she has chosen to leave. It is a prerequisite to the concept of custody that there be parental authority, which cannot be exercised over an emancipated adult child who chooses to withdraw from that authority. The trial judge could therefore not conclude that Stéphane was still in the custody of his mother solely on the ground that he was in need after leaving his mother’s home or that the custody order made in 1977 had not, at the time in question, formally been revoked.

In my view, the purpose of subsection 60.1(1) is to allow the deduction of amounts paid for the benefit of a child as long, as the child is still in the custody of the former spouse or the former spouse mai he ¢ are which attaches to custody. When a child is emancipated and leaves the custody of the spouse, the problem addressed by Parliament in allowing the deduction of amounts paid for the benefit of the child ceases to exist: from that point on, the former spouse no longer has a duty of care deriving from his or her right of custody, and the support can no longer be considered to be owing or paid on account of that duty.

This also explains why Stéphane, after having left his mother’s home, looked to his father and obtained that the support payments be made directly to him. The wording of the application he made to the Superior Court shows that it was based on the fact that despite his mother receiving support paid for his benefit, that support was no longer payable since he had reached the age of majority and was no longer living with his mother. After asserting that he nevertheless remained in need, the application sought a support order against his father. The application was granted and, at the same time, the support that the defendant was paying to his wife for the benefit of Stéphane was cancelled.

Since Stéphane had left the custody of his mother at the relevant time, subsection 60.1(1) does not operate to deem the amounts he received from his father to have been received by his mother, with the result that they are not deductible under section 60(b) of the Act.

(Emphasis added.)

Judge McArthur of the Tax Court of Canada drew the same conclusion in Lafreniére v. Canada (June 12, 1995), 94-2397 (IT):

The point at issue is whether alimony paid to an emancipated adult daughter, of sound mind and body, who has voluntarily chosen to liberate herself from parental authority, is an amount paid for the benefit of a child under the terms of subsection 60. 1(1) of the Act.

Counsel for the respondent referred us to The Queen v. Curzi, 94 D.T.C. 6304, in which the situation was similar to that of the instant case.

I concur with the reasoning of Noel J., as stated above, and make it my own.

Because France had left the custody of her parents, subsection 60.1(1) does not have the effect that the amounts she received from her father, the appellant, are deemed to have been received by the person described in section 60.1 of the Act.

I too fully concur with the above remarks of Noel J. in Curzi, though the facts before me, compared with those considered by the Tax Court of Canada in the judgment a quo, have been somewhat qualified with respect to the original statement by the plaintiff that his son Laurent was “living with neither his mother nor his father” in 1986 and 1987. To my mind, however, the facts put in evidence before me remain essentially the same as those considered by the Tax Court of Canada, and by Noël J. of this Court in Curzi. In fact, there is nothing to suggest that it was under his mother’s authority that Laurent was pursuing university studies in Montréal, where he lived in an apartment. Considering that Laurent attained the age of majority in 1982, it seems more likely, under the circumstances, that he himself chose to pursue his university studies and to have his own apartment near the Université. That his mother co-signed the lease for the apartment is not surprising, given the protection and security usually sought by landlords. As for the fact that his mother continued to offer him a room and even to wash his clothes, it is worth pointing out what Mr. Justice Biron put so very well in Droit de la famille - 1920, in the Superior Court of Quebec, [1994] R.J.Q. 375 at p. 378:

[TRANSLATION]

The Court is of the view that the Divorce Act cannot confer rights over a child — even a child of the marriage — who is of the age of majority, on one or both of the parents; the Act can only impose obligations on them.

This conclusion is not at variance with the Court of Appeal decision in Droit de la famille - 245 [C.A. Montréal 500-09-000599-845, October 31, 1985 (J.E. 85- 1007)], which recognized that a child of the marriage who is of the age of majority has a right of habitation during his or her studies. The Court is of the view that, contrary to what the applicants contend, that judgment by no means suggests that the right of habitation necessarily underlies the right of custody.

Applying the principles set out in Curzi, supra, to this case, I thus conclude that during the 1986 and 1987 taxation years, the son, Laurent Guardo, who was of the age of majority and had obviously withdrawn from parental authority, was not in his mother’s custody within the meaning of subsection 60. 1(1) of the Act. Therefore, the maintenance payments that his father, the plaintiff, made directly to him at that time are not eligible for the tax deduction claimed by the plaintiff.

In the result, the plaintiffs action is dismissed with costs.

Appeal dismissed.