Takis P Veliotis v. Minister of National Revenue, [1972] CTC 2522, 72 DTC 1437

Roland St-Onge:—In this appeal appellant seeks to deduct from his income for the 1969 taxation year an amount of $25,000, paid by him to his ex-wife on November 14, 1969 pursuant to decree dated October 30, 1969, whereby a decree nisi of divorce dated July 23, 1969 became absolute.

Under the terms of the decree nisi, appellant was ordered to pay his ex-wife a sum of $50,000 in lieu of alimony; in so ordering, the Court confirmed an agreement concluded on June 16, 1969, clause 3 of which is entitled “Monetary Measures” and reads as follows:

. . . Mr. Veliotis shall deposit . .. the sum of $25,000 . . . in order that the said sum . . . be paid unto Mrs. Veliotis if and when a final order of divorce is rendered in which would be embodied the provisions of the accessory measures outlined herein, especially those concerning the custody of the children and the respective rights and obligations of the parties, . . .; over and above the cash amount to be paid to Mrs. Veliotis, as above provided for, Mr. Veliotis agrees to pay unto Mrs. Veliotis an additional amount of $25,000 by three yearly instalments of $8,333.33 each, the first becoming due one year after the payment of the initial amount of $25,000 . . .; Mrs. Veliotis expressly renounces her right to any alimony or pension and undertakes to give and execute a final discharge to Mr. Veliotis following the payment of the last instalment.. . .;

On November 14, 1969 appellant paid his ex-wife the sum of $25,000, the first instalment of the $50,000, and, for the 1969 taxation year, he deducted the former sum as alimony under paragraph 11 (1 )(l) of the Income Tax Act, which reads as follows:

11. (1) Notwithstanding paragraphs (a), (b) and (h) of subsection (1) of section 12, the following amounts may be deducted in computing the income of a taxpayer for a taxation year:

(I) 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;

If we examine this section, we find that an amount paid to a former spouse as alimony is an allowable deduction provided that:

(a) it was paid pursuant to an order of a competent tribunal or pursuant to a written agreement;

(b) it was paid to the taxpayer’s spouse or former spouse;

(c) it was paid for the maintenance of the recipient and/or children of the marriage;

(d) it is payable on a periodic basic;

(e) at the time payment was made and throughout the remainder of the year, the former spouses have been living apart pursuant to a divorce, judicial separation or written separation agreement.

The evidence leaves no doubt that appellant meets conditions (a), (b) and (e) above, but it is less certain that the amount of $25,000 constituted alimony payable on a periodic basis. The decree of October 30, 1969 whereby the decree nisi became absolute ordered ap- pellant to pay his ex-wife the sum of $50,000 in lieu of alimony, which means as a Substitute for alimony, and the half of that sum paid in in a single instalment barely fifteen days after the decree became absolute can in no way constitute payment of alimony or other allowances payable on a periodic basis.

I would refer the parties to the following cases: No. 107 v MNR, 8 Tax ABC 321; 53 DTC 222; MNR v Armstrong, [1956] SCR 446; [1956] CTC 93; 56 DTC 1044; Brown v MNR, [1965] CTC 302; 65 DTC 5184; and MacDonald v MNR, [1968] Tax ABC 1271; 69 DTC 2. After reading these decisions, I have concluded that the payment of $25,000 cannot be considered alimony payable periodically. Since appellant does not meet all the conditions specified in paragraph 11 (1)(l) of the Income Tax Act in order for the $25,000 payment to be deductible, his appeal is dismissed.

Appeal dismissed.