Hamer v. R., [1999] 1 CTC 45, 98 DTC 6422

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[1999] 1 CTC 45, 98 DTC 6422

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Text of decision

Marceau J.A.:

These two applications for judicial review were set down for hearing at the same time since they raised the same question with respect to the application of certain provisions of the Income Tax Act and involved the same counsel. The applications challenged two identical decisions of the Tax Court of Canada which had again upheld the Minister of National Reve

nue’s assessment of tax on alimony in the hands of a former spouse with custody of children born within the marriage, where the alimony was paid by the other former spouse for the maintenance of the children following a divorce or separation judgment. Again the issue was whether the fact that the sums received were exclusively for the maintenance of the children deprived the recipient of the discretion that was necessary in order for these payments to be considered as allowances within the meaning of subsection 56(12) of the Act,[1] and consequently should not be included in the custodial former spouse’s income under paragraphs 56( 1 )(/?), (c) or (c. 1) of the Act.[2]

We are all of the view that the argument of counsel for the applicants, which in a nutshell would insert the adjective “absolute” before the word “discretion” in subsection 56(12) of the Act so that the slightest general earmarking of a support payment would mean that it could no longer be characterized as a taxable allowance, is untenable given the context in which the provision is found. Ably though counsel presented it, the argument does not stand up to analysis, as the Judge of the Tax Court of Canada made abundantly clear in his reasons for judgment.

Counsel for the respondent did such a good job of interpreting the Trial Judge’s analysis that we wondered for a moment whether we should examine some of her arguments. However, we came to the conclusion that additional new reasons would on the whole add nothing substantial and might even detract somewhat from the coherence and clarity of the reasons at trial. Therefore, we simply adopt the reasons of the Judge of the Tax Court of Canada.

Both applications for review will accordingly be dismissed.

Application dismissed.

payer, the children of the taxpayer or both the taxpayer and the children of the taxpayer if

(1) the order was made

(A) after February 10, 1988, or

(B) before February 11, 1988 and the taxpayer and the person required to pay the amount jointly elected in writing before the end of the year to have this paragraph and paragraph 60(c.1) apply with respect to all those amounts,

(ii) at the time the amount was received and throughout the remainder of the year, the taxpayer was living apart from the person required to pay the amount, and

111) the person required to pay the amount is a person of the opposite sex who

(A) before the date of the order cohabited

with the taxpayer in a conjugal relationship,

or

(B) is the natural parent of a child of the taxpayer; ....

Which I reproduce here as it read for the years in question:

56. (12) Subject to subsections 56.1(2) and 60.1(2), for the purposes of paragraphs (1)(b), (c) and (c.1) (hereinafter in this subsection referred to as the “former paragraphs”) and 60(b), (c) and (c. 1) (hereinafter in this subsection referred to as the “latter paragraphs”), “allowance” does not include any amount that is received by a person, referred to in the former paragraphs as “the tax payer” and in the latter paragraphs as “the recipient”, unless that person has discretion as to the use of the amount.

These provisions read as follows for the years in question:

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 decree, order or judgment of a competent tribunal or pursuant to a written agreement, as alimony or other allowance payable on a peri odic 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 divorce, judicial separation or 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;

(c) any amount received 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 taxpayer, children of the taxpayer, or both the taxpayer and children of the taxpayer if, at the time the payment was received and throughout the remainder of the year, the taxpayer was living apart from the taxpayer’s spouse who was required to make the payment;

(c. 1) any amount received 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 tax-

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Hamer v. R., [1999] 1 CTC 45, 98 DTC 6422

Citations[1999] 1 CTC 45, 98 DTC 6422

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Citations
[1999] 1 CTC 45, 98 DTC 6422