Singer v. Minister of National Revenue, [1975] C.T.C. 2066, 75 D.T.C. 40

A W Prociuk:

1 The appellant, Gordon Singer, appealed from the respondent's reassessment of his income for the taxation years 1968, 1969, 1970 and 1971, wherein certain deductions from income by the appellant Gordon Singer in respect of payments made to his wife, Paula Helene Singer, pursuant to three court orders of the Supreme Court of Ontario, were disallowed on the ground that such disallowed deductions do not come within the meaning of paragraph (l) of subsection (1) of section 11 of the Income Tax Act as it then was in force.

2 Pusuant to the provisions of subsection 174(1) of the Income Tax Act the respondent applied to the Tax Review Board for an order joining Paula Helene Singer as a party to the appeal commenced by Gordon Singer in respect of the taxation years 1970 and 1971 (the years 1968 and 1969 being statute-barred as against Paula Helene Singer) and for the determination of the question whether:

(a) the whole or any part of the payments in the amount of $8,498.85 in the taxation year 1970 and $8,477.38 in the taxation year 1971 by Gordon Singer to Paula Helene Singer is

• (i) by virtue of section 11(1)(l) deductible by Gordon Singer in the respective years and

• (ii) by virtue of section 6(1)(d) to be included in computing income for each of the said years by Paula Helene Singer.

3 Pursuant to an order of the Tax Review Board dated July 5, 1974 appropriate notices of hearing had been served on the parties concerned for the determination of the said question and disposition of the appeals relative thereto accordingly, for the sittings of the Board at the November 1974 sittings in Toronto, commencing on November 4.

4 Pursuant to the said order, Paula Helene Singer was joined in the appeal of Gordon Singer in respect of the taxation years 1970 and 1971 and she filed her appeal as if she were appealing from an assessment to this Board.

5 Gordon Singer claimed a deduction in the sum of $18,208.71 for the taxation year 1968 and $12,814.38 for the taxation year 1969. The respondent disallowed $6,508.71 in 1968 and $6,814.38 in 1969.

6 The parties separated in January of 1968 and Paula Helene Singer and the two infant children of the marriage continued to live in the matrimonial home, registered in both their names as joint tenants.

7 Pursuant to an order of the Supreme Court of Ontario, dated April 2, 1968, made by the Honourable Mr Justice Stewart, filed as Exhibit A-1A, Gordon Singer was ordered to pay to Paula Helene Singer as interim alimony the sum of $200 per week from April 2, 1968 and to pay all arrears of taxes, insurance and mortgage payments on the premises known municipally as No 359 Hillhurst Boulevard, the matrimonial home, and in addition to continue to pay current bills for utilities, taxes, insurance and mortgage payments with respect to the said premises. He was also ordered to pay Paula Helene Singer for the maintenance of the infant children, Rena Monique Singer and Brian John Singer the sum of $100 per week from the same date until the trial or other disposition of the action commenced by Paula Helene Singer or Gordon Singer.

• 1. The premises known as No 359 Hillhurst Boulevard be forthwith listed for sale, upon terms as same are more particularly set out in the said judgment.

• 2. That Gordon Singer pay the monthly first mortgage payments, municipal taxes and fire insurance and gas, hydro and water payments chargeable against the said premises herein adjusted up to the date of sale with a rider that he shall be entitled to be paid as a first charge against Paula Helene Singer's share of the proceeds of the sale one-half of the aggregate of such payments accruing due and made by him from and after April 1, 1969.

• 3. That Gordon Singer pay up arrears of interim alimony fixed at the sum of $300 together with the payment of utilities accruing due up to and including January 28, 1969.

• 4. That Gordon Singer pay to Paula Helene Singer for the maintenance and support of the said children at a rate of $250 per month for each child commencing on January 28, 1969 and monthly thereafter.

• 5. That Gordon Singer pay “all expenses for religious and educational training and summer camp for the children, the cost of which shall be approved by the Defendant, including in addition to the regular fees all incidental expenses charged by such institutions and that the Defendant do pay all such expenses directly to the said institution or camp forthwith after presentation of the accounts therefor by the Plaintiff to the Defendant and that the Defendant do continue to keep the children enrolled in Ontario Medical Services Insurance Plan and the Ontario Hospital Services Commission Plan and do pay all premiums in respect thereto so long as he is obliged by the terms hereof to pay maintenance with respect to the children”.

9 Exhibit A-3A is a judgment of the Supreme Court of Ontario dated December 18, 1970, given by the Honourable Mr Justice Hughes, varying the payments in respect of maintenance and support for the said children.

10 It was admitted by the appellant Paula Helene Singer that Gordon Singer did comply with the court orders relating to payments to be made by him. She strongly objected to having the payments made by him in respect of medical, religious, educational, camping and other miscellaneous fees and accounts over and above the monthly maintenance payments being $500 per month for both children in 1970 and 1971 added to her income in each respective year.

11 Exhibits A-4, A-5, A-6 and A-7 filed on behalf of Gordon Singer are synoptics of payments made by him in the years 1968, 1969, 1970 and 1971 pursuant to court orders mentioned earlier.

12 Paragraph 11(1)(l) of the Act then in force 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:

• (l) 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;

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:

• (la) an amount paid 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 recipient thereof, children of the marriage, or both the recipient and children of the marriage, if he was living apart from his spouse to whom he was required to make the payment at the time the payment was made and throughout the remainder of the year;

6. (1) Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year

• (d) an 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 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 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;

13 Learned counsel for the appellant Gordon Singer submitted that all payments made are deductible from his income as same were made pursuant to a court order as alimony or other allowance.

14 It hardly requires to be repeated here that we are dealing with a taxing provision and if it were not for the provisions of paragraphs 11(1)(l) and (la) none of the payments would be deductible. Compliance with a court order does not necessarily permit all the payments made to be deducted for tax purposes. I fail to see why a husband should deduct from his income education fees or taxi fares to school which he paid for his children in addition to the regular monthly maintenance payment, and the wife, having custody of the children, be taxed on these additional payments. He would not be permitted to make a deduction from his income in respect of any payments including the amounts spent on maintenance of his children if he cohabited with his spouse. In the court order (Exhibit A-2A) in this case, these extra payments are not characterized as monthly maintenance payments but rather in addition thereto.

15 Accordingly, the question is determined on the basis that $6,000 is deductible by the appellant Gordon Singer from his income in the taxation years 1970 and 1971 by virtue of paragraph (11)(1)(l) and it follows that the sum of $6,000 be included in computing income for each of the said years by Paula Helene Singer by virtue of paragraph 6(1)(d). The appeals of the appellant Gordon Singer for the taxation years 1970 and 1971 are dismissed and the appeals of Paula Helene Singer for the same years are allowed on the basis of the said determination.

16 In respect of the taxation years 1968 and 1969, the appellant Gordon Singer in addition to making payments to his wife pursuant to court orders (Exhibits A-1A and A-2A) on account of alimony and maintenance for herself and the children on a periodic basis within the meaning of the said paragraph 11(1)(l), also made monthly mortgage payments on the house referred to earlier, beneficially owned by both and occupied by the wife and children at all material times, that is from April 2, 1968 to the date of sale, August 1, 1969, that being the date of the last mortgage payment. These payments were in the sum of $274.02 per month. He also paid municipal taxes, gas, hydro and water bills as they became due. He was entitled to be repaid one-half of these payments he made after April 1, 1969, by Paula Helene Singer, from her share of the proceeds of the sale of the house, in accordance with the terms of the court order (Exhibit A-2A).

17 On April 11, 1968 the appellant issued a cheque to his wife in the sum of $1,627.52 of which $274.02 was applied on current mortgage payment and the remainder was on mortgage arrears and alimony arrears and current. Mrs Singer made the mortgage payments as soon as she received the required sum from the appellant for that purpose. Mrs Singer turned over the utility bills, as she received them monthly in respect of the house, to the appellant which he paid direct to the municipal office or in certain months added the current utility bill to the alimony payment and made same payable to her and she, in turn, paid it. Thus, I find that the appellant paid in the taxation year 1968, $2,466.18 in respect of the current mortgage payments pursuant to the court order aforesaid, and $250.50 in respect of current utilities.

18 In 1969 the appellant similarly made payments on account of the mortgage and utilities. Taking into consideration the adjustments which he was entitled to recover at date of sale of the house, I find that he paid $1,507.11 in respect of the mortgage and $283.49 for utilities.

19 In accordance with the decision in a similar situation in Hastie v Minister of National Revenue, [1972] C.T.C. 2383, 72 D.T.C. 1335, by Maurice Boisvert, Esq, QC of the former Tax Appeal Board, which was upheld, on appeal by the respondent, by Mr Justice Walsh of the Federal Court of Canada, reported at[1974] C.T.C. 131, 74 D.T.C. 6114, I am of the opinion that the appellant Gordon Singer is entitled to deduct from his income for the taxation year 1968 a further sum of $2,716.68 and from his 1969 taxation year a further sum of $1,790.60.

20 Accordingly, the appeals of Gordon Singer for the taxation years 1968 and 1969 are allowed in part on the basis that the taxable income for the said years be reduced by $2,716.68 and $1,790.60 respectively, and the matter referred back to the respondent for reassessment accordingly. In all other respects the appeals are dismissed.