Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
On XXXXXXXXXX , the court issued a court order varying a pre-May 1997 court order on child support. The XXXXXXXXXX variation order changed the amount of child support "commencing the XXXXXXXXXX ..."
What is the commencement day of the pre-May 1997 court order?
Position TAKEN:
The commencement day of the pre-May 1997 court order is the date that the first varied amount is payable after the date of the variation order, which appears to be XXXXXXXXXX .
Reasons FOR POSITION TAKEN:
Subparagraph (b)(ii) of the definition of "commencement day" in subsection 56.1(4) states "the day on which the first payment of the varied amount is required to be made". Prior to the date that the variation order was made, there was no legal obligation to pay the varied amount. As a result, "the day on which the first payment of the varied amount is required to be made" can be no earlier than the date of the variation order. The variation order set the amount of child support to be payable on the XXXXXXXXXX of each month. Therefore, the first payment of the varied amount is required to be made on XXXXXXXXXX .
November 15, 2000
Toronto East Tax Services Office HEADQUARTERS
Client Services Division T. Young
Section 471-1-4 952-1506
Attention: Lois Sellers
2000-004191
Commencement Day of Court Order Varying Pre-May 1997 Court Order
This is in reply to your memo of August 8, 2000, wherein you requested our views on the "commencement day" of a court order for child support.
On XXXXXXXXXX, the court issued a variation order changing the amount of child support payable under a XXXXXXXXXX court order ("original order"). The variation order changed the child support payable by XXXXXXXXXX (the "Husband") to XXXXXXXXXX (the "Wife") from $XXXXXXXXXX per month to $XXXXXXXXXX per month "commencing the XXXXXXXXXX ..."
Paragraph XXXXXXXXXX of the variation order states:
"XXXXXXXXXX ..."
You have asked us to determine the commencement day of the original court order or of the variation order pursuant to subsection 56.1(4) of the Income Tax Act (the "Act").
The definition of commencement day in subsection 56.1(4) of the Act states:
"commencement day" at any time of an agreement or order means:
(a) where the agreement or order is made after April 1997, the day it is made; and
(b) where the agreement or order is made before May 1997, the day, if any, that is after April 1997 and is the earliest of
(i) the day specified as the commencement day of the agreement or order by the payer and recipient under the agreement or order in a joint election filed with the Minister in prescribed form and manner,
(ii) where the agreement or order is varied after April 1997 to change the child support amounts payable to the recipient, the day on which the first payment of the varied amount is required to be made, (Underlined for emphasis)
(iii) where a subsequent agreement or order is made after April 1997, the effect of which is to change the total child support amounts payable to the recipient by the payer, the commencement day of the first such subsequent agreement or order, and
(iv) the day specified in the agreement or order, or any variation thereof, as the commencement day of the agreement or order for the purposes of this Act.
Whether a post-April 1997 order or agreement triggers the application of the new child support rules is dependent on, inter alia, the legal relationship between the order or agreement and any pre-May 1997 order or agreement. In particular, such a determination is dependent on whether the post-April 1997 order or agreement supersedes other orders or agreements, whether an obligation to pay child support exists under the post-April 1997 order or agreement, or whether it changes in any way child support amounts. In the above situation, the variation order does not appear to supersede the original order but rather is just varying the child support amounts in that original order. In this regard, we refer you to paragraph XXXXXXXXXX of the variation order that states "XXXXXXXXXX". In our opinion, the original order has remained legally effective from its inception, such that the legal obligation to pay child support has remained under the original order and the variation order is simply varying the amount of child support payable. It follows then that paragraph (a) of the definition of "commencement day" is not applicable and the issue then is the application of subparagraph (b)(ii) of the definition of "commencement day" with respect to the original order.
Since the variation order does change the child support amounts payable to the recipient, the original order will have a "commencement day". Even though the variation order is retroactive in that it has legal force and effect back to XXXXXXXXXX, we are of the view that "the day on which the first payment of the varied amount is required to be made" is XXXXXXXXXX. In this regard, prior to the issuance of the variation order, there was no legal obligation to pay the varied amount. As such, there could not have been a requirement to pay the varied amount on XXXXXXXXXX or any time before the variation order was made on XXXXXXXXXX. As well, paragraph XXXXXXXXXX of the variation order states that interest began accruing from XXXXXXXXXX. This is further evidence that there was no requirement to pay the varied amount before that date. Paragraph 2 of the variation order changes the amount of child support to "... ($XXXXXXXXXX ) per month, commencing the XXXXXXXXXX , ...". Therefore, the date that "the first payment of the varied amount is required to be made" appears to be XXXXXXXXXX. Accordingly, the commencement day of the original order is XXXXXXXXXX.
Because the amount of child support payable under the original order has been reduced from $XXXXXXXXXX to $XXXXXXXXXX per month effective XXXXXXXXXX, the variation order resulted in an overpayment of child support during the period from XXXXXXXXXX, to XXXXXXXXXX. The repayment of this amount by the Wife to the Husband results in an income inclusion for the Husband pursuant to paragraph 56(1)(c.2) of the Act and a deduction for the Wife pursuant to paragraph 60(c.2) of the Act.
We trust that these comments will be of assistance.
for Director
Business and Publications Division
Income Tax Rulings Directorate
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