The
Assistant
Chairman:—Had
section
60.1
of
the
Income
Tax
Act
(as
amended
by
tax
reform)
not
been
put
into
that
Act,
this
case
would
never
have
been
appealed
as
the
claim
the
appellant
is
asserting
clearly
is
not
within
the
ambit
of
paragraph
60(b)
as
that
section
has
been
interpreted
by
the
Federal
Court
of
Appeal
in
the
cases
of
Her
Majesty
the
Queen
v
Morton
Pascoe,
[1976]
1
FC
372;
[1975]
CTC
656;
75
DTC
5427,
and
Attorney
General
of
Canada
v
James
C
Weaver
and
Freda
J
Weaver,
[1976]
1
FC
423;
[1975]
CTC
646;
75
DTC
5462.
The
appellant
and
his
wife
entered
into
a
separation
agreement
in
October
1974.
On
order
of
the
Supreme
Court
of
Ontario
by
Master
Davidson
with
respect
to
interim
alimony
was
made
in
June
1975.
A
further
order
of
that
Court
by
Master
McBride
amending
the
order
of
Master
Davidson
was
made
in
March
1976.
The
relevant
portions
of
the
order
of
June
1975
are
as
follows:
2.
AND
IT
IS
FURTHER
ORDERED
that
the
defendant
do
continue
to
make
payments
to
maintain
the
present
maintenance
of
the
plaintiff
in
the
amount
of
$75
per
week
during
the
period
of
adjournment.
3.
AND
IT
IS
FURTHER
ORDERED
that
the
defendant
do
continue
to
pay
mortgage
installments,
realty
taxes
and
utilities
on
the
matrimonial
home
at
the
rate
he
has
been
paying
in
the
past,
during
the
period
of
adjournment.
and
the
relevant
portion
of
the
order
of
March
1976
is
as
follows:
2.
AND
IT
IS
FURTHER
ORDERED
that
the
order
of
Master
Davidson,
made
the
3rd
day
of
June,
1975,
is
varied
to
provide
for
weekly
payments
of
$110
per
week
during
the
period
of
adjournment,
but
otherwise
is
to
remain
in
full
force.
The
appellant
claimed
as
a
deduction,
presumably
pursuant
to
paragraph
60(b)
and
section
60.1
of
the
said
Income
Tax
Act,
all
amounts
he
paid
to
his
spouse
as
well
as
all
amounts
paid
to
third
parties
pursuant
to
the
court
orders.
With
respect
to
the
claims,
the
respondent
disallowed
$4,368.75
in
1975
and
$5,487.17
in
1976
as
not
coming
within
the
provisions
of
paragraph
60(b)
or
section
60.1.
It
should
be
mentioned,
and
counsel
for
the
parties
agreed,
that
the
wife
in
1975
and
1976
resided
in
the
matrimonial
home,
which
home
was
owned
in
joint
tenancy
by
the
appellant
and
his
wife.
It
was
also
agreed
that
the
amounts
disallowed
were
payments
on
account
of
mortgage
principal,
mortgage
interest,
and
municipal
taxes
on
the
matrimonial
home
as
well
as
for
utilities,
eg
gas,
oil,
water,
etc,
used
during
those
years
by
the
wife.
The
appellant
did
not
reside
in
the
matrimonial
home.
Of
the
amounts
disallowed
in
1975,
$2,093
was
the
total
of
payments
to
the
mortgage
company,
being
made
up
of
principal
of
$254.93,
interest
of
$962.81,
and
taxes
of
$875.26.
In
1976
the
total
payments
was
$3,780,
made
up
of
principal
of
$499.58,
interest
of
$1,608.72,
and
taxes
of
$1,671.70.
It
should
be
noted
that
the
claim
for
1975
is
only
for
7
months
(first
order,
June
1975)
and
for
1976
it
is
for
12
months.
Counsel
for
the
appellant,
in
effect,
relied
on
my
decision
in
the
appeal
of
Gordon
A
Bryce
v
MNR,
[1978]
CTC
3144;
78
DTC
1833.
The
Crown
did
not
ac-
cept
that
judgment
and
has
appealed
it
to
the
Federal
Court
of
Canada,
Trial
Division.
I
understand
it
finally
came
up
for
hearing
in
early
February
1980,
but
no
one
appeared
for
the
taxpayer
and
so
it
was
adjourned.
In
any
event,
no
one
could
tell
me
that
that
appeal
had
been
heard.
Counsel
for
the
Crown,
while
not
accepting
the
Bryce
decision,
said
with
respect
to
that
decision,
it
appears
that
two
positions
were
not
submitted
to
the
Board
or,
if
they
were,
it
would
appear
that
they
were
not
considered.
The
first
point
is
to
realize
how
the
amount
of
any
allowance
in
paragraph
60(b)
or
(c)
to
be
deducted
in
computing
the
payer’s
income
in
the
year
is
allowed.
It
is
not
allowed,
counsel
stressed,
because
of
the
words
in
either
paragraph
(b)
or
(c),
but
because
of
the
opening
words
of
section
60,
namely:
There
may
be
deducted
in
computing
a
taxpayer’s
income
for
a
taxation
year
such
of
the
following
amounts
as
are
applicable.
Section
60.1
he
submits
is
not
a
subsection
of
section
60,
but
is
a
separate
section
by
itself
and
section
60.1
of
itself
really
says
nothing
more
than
that
the
payments
contemplated
therein,
if
made,
are
deemed
to
be
paid
to
the
spouse
or
former
spouse.
There
is
no
statement
anywhere
that
the
payment
within
section
60.1
is
to
be
deducted
in
computing
the
payer’s
income
for
the
year.
Section
60.1
reads
as
follows:
Where,
after
May
6,
1974,
a
decree,
order,
judgment
or
written
agreement
described
in
paragraph
60(b)
or
(c),
or
any
variation
thereof,
has
been
made
providing
for
the
periodic
payment
of
an
amount
by
the
taxpayer
to
or
for
the
benefit
of
his
spouse,
former
spouse
or
children
of
the
marriage
in
the
custody
of
the
spouse
or
former
spouse,
the
amount
or
any
part
thereof,
when
paid,
shall
be
deemed
to
have
been
paid
to
and
received
by
the
spouse
or
former
spouse
if
the
taxpayer
was
living
apart
from
the
spouse
or
former
spouse
at
the
time
the
payment
was
received
and
throughout
the
remainder
of
the
year
in
which
the
payment
was
received.
In
addition,
the
Bryce
case
does
not
indicate
a
consideration
of
the
word
“periodic”
in
section
60.1
in
that
the
payments
therein
have
to
be
at
least
“periodic”
to
be
deductible
and
the
type
of
payment
disallowed
in
the
appeal
was
of
the
type
considered
in
the
Weaver
case
by
the
Federal
Court
of
Appeal.
In
this
respect
counsel
referred
to
the
dissenting
reasons
of
Urie,
J
in
the
Weaver
case.
The
payments
therein
were
similar
to
the
payments
herein.
The
Court
said
they
were
not
an
allowance
under
paragraph
60(b)
and
so
upheld
the
assessment,
Urie,
J
stated:
However,
none
of
the
payments,
with
the
exception
of
the
mortgage
payments,
meet
either
the
test
for
an
allowance
enunciated
in
the
Pascoe
case
nor
the
requirement
of
payment
on
a
periodic
basis.
The
payments
were
not
determined
by
the
agreement
to
be
at
fixed,
recurring
intervals
of
time.
Indeed,
the
agreement
said
nothihg
about
when
the
payments
of
such
expenses
must
be
made.
None,
except
the
mortgage
payments
meet
the
requirement
of
regularity
of
payment
that
is
an
essential
characteristic
of
payment
on
a
periodic
basis.
They
were,
therefore,
in
my
view,
not
properly
deductible
in
the
tax
year
in
question.
Clearly
he
is
of
the
view
that
the
mortgage
payments
meet
the
test
of
“regularity
of
payment”.
He
did
say
the
others
did
not
in
that
the
agreement
said
nothing
about
when
they
were
to
be
made.
Here
he
was
considering
“periodic”
with
reference
to
allowance
in
paragraph
60(b).
Counsel’s
submission
in
the
instant
appeal
was
with
respect
to
“periodic”
in
section
60.1.
Mr
Justice
Urie
concluded
his
dissent
as
follows:
In
the
result,
therefore,
I
would
set
aside
the
decision
of
the
Tax
Review
Board
and
refer
the
matter
back
to
the
Board
for
determination
on
the
basis
that
in
addition
to
the
deduction
of
$1,950
permitted
by
the
assessment
in
respect
of
the
respon
dent
Husband’s
1972
taxable
income,
there
be
permitted
as
a
deduction
pursuant
to
section
60(b)
of
the
Income
Tax
Act
that
portion
of
the
monthly
instalments
paid
in
respect
of
the
mortgage
in
the
taxation
year
1972
made
up
of
one-half
of
the
principal
portion
of
each
such
payment,
together
with
the
interest
and
tax
portion
thereof.
With
respect
to
counsel’s
first
submission,
I
am
of
the
view
that,
while
section
60.1
does
not
contain
the
opening
clause
as
does
section
60,
it
(section
60.1)
is
so
related
to
paragraph
60(b)
and
paragraph
60(c)
that
that
section,
if
the
payment
or
payments
meet
the
qualification
of
that
section,
permits
the
deduction
to
the
payer
of
those
amounts.
I
am
of
the
view
that
section
60.1
was
enacted
to
permit
at
least
some
of
the
types
of
payments
the
appellant
made
in
this
instant
appeal
which
were
for
the
benefit
of
his
spouse
or
former
spouse.
Counsel
suggested
the
section
intended
to
clearly
state
that,
if
part
of
the
“allowance”
in
paragraph
60(b)
or
paragraph
60(c)
were
paid
by
the
husband
or
former
husband
to
a
creditor
of
the
wife
or
former
wife
at
the
direction
of
the
wife
or
former
wife,
it
was
still
payment
to
the
wife
or
former
wife.
With
respect,
I
cannot
agree.
It
appears
to
me
that
the
part
of
the
allowance,
which
counsel
suggested
was
brought
into
income
by
section
60.1
in
the
above
situation,
was
already
required
to
be
treated
as
income
of
the
wife
or
former
wife
by
subsection
56(2)
of
the
said
Act.
This
section
reads
as
follows:
A
payment
or
transfer
of
property
made
pursuant
to
the
direction
of,
or
with
the
concurrence
of,
a
taxpayer
to
some
other
person
for
the
benefit
of
the
taxpayer
or
as
a
benefit
that
the
taxpayer
desired
to
have
conferred
on
the
other
person
shall
be
included
in
computing
the
taxpayer’s
income
to
the
extent
that
it
would
be
if
the
payment
or
transfer
had
been
made
to
him.
Concluding
as
I
do
that
section
60.1
is
to
permit
a
deduction
of
“benefits”
as
well
as
an
“allowance”,
I
think
that
the
word
“periodic”
should
be
interpreted
accordingly.
The
various
utility
bills,
when
submitted
to
the
occupant
of
the
home,
had
a
due
date.
Whether
the
appropriate
meter
is
read
and
billed
every
month,
every
two
months
or
every
three
months,
I
believe
“regularity
of
payment”
is
expected
and
demanded
by
the
supplier.
Consequently,
I
find
the
amount
paid
for
utilities
to
be
within
the
ambit
of
section
60.1
and
so
deductible.
With
respect
to
payments
for
interest,
principal
and
taxes,
since
the
appellant’s
wife
was
occupying
the
matrimonial
home,
counsel
for
the
appellant
submitted
that
the
total
of
those
three
amounts
should
be
a
deduction
to
the
appellant.
As
Urie,
J
stated
in
the
Weaver
case,
only
one-half
of
the
principal
should
be
deductible
but
all
the
taxes
and
interest
would
be
deductible.
I
make
the
same
finding
in
this
appeal.
The
result
is
the
appeal
will
be
allowed
and
the
assessments
remitted
to
the
respondent
for
variation
to
increase
the
allowance
in
1975
by
$4,241.29
and
in
1976
by
$5,237.38.
Appeal
allowed.
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