Jean Guay v. Minister of National Revenue, [1973] CTC 2279, 73 DTC 224

The Assistant Chairman:—The appeal is from a tax assessment for the 1970 taxation year.

The matter at issue is the deduction of a sum of $1,004.90 claimed by the appellant under paragraph 11 (1 )(l) of the Income Tax Act and added by the respondent to the appellant’s taxable income.

As a result of Superior Court judgment No 796-571, dated July 31, 1970 (Exhibit A-1), appellant paid his wife weekly alimony in the amount of $55; deduction of this amount was allowed by the respondent under the said section 11(1 )(l). Thus the alimony payments are not in question here. However, the said judgment allowed the wife to continue to live in the family domicile, 554 Vachon Street, Ville LaSalle, which was at that time the property of the appellant, and obliged the latter to make the following monthly payments, capital and interest: the costs of insurance, maintenance, heat and electricity and his wife’s and children’s medical expenses.

The appellant, who was living away from home and had been ordered by the said judgment to pay, in addition to the said alimony, the costs of maintaining his wife and children inhabiting the said domicile, claimed the following amounts as deductions for the year 1970:

$1,210.00—representing alimony (22 weeks at the rate of $55.00 per

week) and allowed by the respondent

$1,004.90—itemized as follows:

$ 46.20—doctors’ prescriptions

107.00—doctors’ care

650.00—rent (5 months at $130.00)

68.52—heating

133.18—electricity

The Minister of National Revenue refused to allow appellant to deduct the amount itemized above, submitting that he had not paid it pursuant to a judgment of a competent tribunal and that it did not come within the meaning of paragraph 11(1)(l) of the Income Tax Act but that it represented personal or living expenses within the meaning of paragraph 12(1 )(h) of the said Act and was, therefore, not deductible.

There is no doubt that the above-mentioned Superior Court judgment ordered the appellant to provide for the maintenance of his wife and children in the family domicile in addition to paying the said alimony.

At no point did the respondent question the accuracy of the amount appellant claimed to have spent for the maintenance of his wife and children and the Board concludes that the said amount is not under dispute in the present case. The only question to be decided with regard to the rent, heating, electricity and medical expenses appellant was ordered to pay by a competent tribunal is whether these were maintenance expenses within the meaning of the said paragraph 11(1 )(l), and therefore deductible, or personal or living expenses of the appellant.

Paragraph 11 (1 )(l) sets forth five conditions under which maintenance expenses may be deducted: (1) such amounts must be paid pursuant to a decree, order or judgment of a competent tribunal; (2) they must be paid for the maintenance of the wife and children; (3) they must be paid on a periodic basis; (4) they must be paid at the time of separation of the husband and wife and throughout the remainder of the year; (5) they must be paid by the husband.

Since the appellant was not living with his wife in the family home, since he was ordered by a competent tribunal to pay, inter alia, electricity and heating expenses for his property on a periodic basis, and since he fulfils the other conditions set forth in paragraph 11 (1 )(l), I am therefore of the opinion that these were payments made for the maintenance of his wife and children and that they are deductible under the said section 11 (1)(l).

It is possible to question the periodicity of the medical expense payments, and it should be pointed out that neither the Act nor case law are clear and definite on this point, nor, for that matter, on maintenance costs in general. However, by reason of the very nature and purpose of medical expenses, I believe that no one would dare to deny that they are maintenance expenses, although normally they are not paid on a periodic basis. Must the conclusion therefore be drawn that such expenses, which are definitely maintenance expenses, are not deductible because they have not been paid periodically?

Without understanding the legislator’s reasons for including the periodic payments condition in paragraph 11(1)(1) of the Income Tax Act, I am morally certain that it was not his intention to prevent a taxpayer from deducting payments which obviously represented maintenance expenses in this case and which he was ordered to make by a competent tribunal.

In my opinion it does not make sense to allow the deduction of payments for heat and electricity because they were made periodically and refuse to allow the deduction of medical expenses bcause their nature is such that they cannot be paid on a periodic basis. I therefore conclude that such medical costs were part of the maintenance expenses appellant was ordered by a judgment of a competent tribunal to pay and that he may, therefore, deduct them.

Coming to the rental expenses in the amount of $650, it would appear from appellant’s testimony that he was the owner of the family home at the time with which the appeal is concerned and that the payment of $130 per month for five months of the taxation year in question did not represent rent but principal and interest on a mortgage on the said property.

Although he was obliged, by the Superior Court judgment, to house his wife and children in the said home and to make the said payments, these expenses were of benefit to the appellant himself and cannot be considered to be expenses for the maintenance of ‘his wife and children; in my opinion they represent personal or living expenses, which are not deductible.

For the above reasons the appeal is allowed in part and the matter referred back to the respondent for reassessment, the following deductions being allowed: $153.20 for medical expenses; $68.52 for heating costs; $133.18 for electrical expenses.

Appeal allowed in part.