Principal Issues:
Situation 1 - H is required to make periodic child support payments under a pre-May 1997 order (the First Order). H is in arrears with respect to the payments. Subsequent to April 1997, an order was issued (the Second Order) that reduced the arrears but did not change the periodic amount payable for child support which would continue under the First Order. H Then paid the reduced arrears. The issues are whether (a) the arrears are deductible and (b) whether there is a commencement day in respect of the second order. A third issue (c) concerns the tax consequences if the third order had changed (reduced) the child support payable on a retroactive basis that still resulted in the payment of arrears.
Situation 2 - H is required to pay child support in respect of two children to W under a December 1993 court order. Under an October variation order, child support ceased to be payable for one child. As a result of a January consent variation order, H obtained custody of the two children and was not required to pay any child support. The January, 1997 order also provided that, in the event that custody of the children reverted to W, the terms of the original December 1993 order, as varied by the October 1996 order, would be applicable. In July, 1997, the two children were placed in W's custody and H was again required to make child support payments to W commencing on July 1, 1997. The issue is whether there is a commencement day (i.e., July 1, 1997).
Position:
Situation 1 - (a) The payment of the arrears are not deductible. (b) There is no commencement day. (c) The payment of lump sum arrears would not be deductible and that the commencement day would be the first day that the varied amount is required to be paid.
Situation 2 - There is no commencement day.
Reasons: