13 June 2001 Internal T.I. 2001-0078237 - support payments

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: A separation agreement included terms concerning support that an individual ("Individual A") was to provide ($XXXXXXXXXX of each month) to his spouse ("Individual B") as well as certain expenses (e.g., with respect to the residence occupied by Individual B and the two children). The agreement provided that it would be effective from XXXXXXXXXX until XXXXXXXXXX .

Under the terms of a court order dated XXXXXXXXXX (the "Order"), Individual B was granted custody of the two children and Individual A was required to pay Individual B the monthly amount of $XXXXXXXXXX for the support of the two children and the monthly amount of $XXXXXXXXXX for the support of Individual B, commencing XXXXXXXXXX . Individual A was also liable to pay Individual B the amount of $XXXXXXXXXX as arrears (the "Arrears") with respect to the months of XXXXXXXXXX (i.e., $XXXXXXXXXX for each of the three months). However, the Order also indicated that the payment of the Arrears was suspended until a hearing was held in respect of the Arrears. The hearing was held in XXXXXXXXXX , which held that Individual A was not required to pay the Arrears to Individual B.

Are the Arrears "payable" for the purposes of paragraph 60(b) of the Income Tax Act (the "Act").

Position: No

Reasons:  The payment of the Arrears was suspended by the Order, therefore, they are not "payable" under the Order.
		June 13, 2001

	Charlottetown Tax  	HEADQUARTERS
	     Services Office 	M. Eisner
	Client Services Division	(613) 957-2138

Attention : Sharon Bulger
2001-007823

Support Payments

This is in reply to your memorandum of April 3, 2001 concerning the above-noted subject.

In the circumstances of your situation, XXXXXXXXXX ("Individual A") and XXXXXXXXXX ("Individual B"), who were married on XXXXXXXXXX and have two children, began to live separate and apart from each other on XXXXXXXXXX. On XXXXXXXXXX, Individual A and Individual B entered into an interim agreement (the "Agreement"), which set out a number of terms concerning the separation. The Agreement included terms concerning support that Individual A was to provide (e.g., $XXXXXXXXXX of each month) to Individual B as well as certain expenses that were to be paid by Individual A (e.g., with respect to the residence occupied by Individual B and the two children). The Agreement was effective from

XXXXXXXXXX until XXXXXXXXXX and a term was included indicating that it would be void if a final resolution was made before XXXXXXXXXX.

The Court of Queen's Bench of New Brunswick issued an order that was dated XXXXXXXXXX (the "Order"). Under the terms of the Order, Individual B was granted custody of the two children and Individual A was required to pay Individual B the monthly amount of $XXXXXXXXXX for the support of the two children and the monthly amount of $XXXXXXXXXX for the support of Individual B, commencing XXXXXXXXXX. Individual A was also liable to pay Individual B the amount of $XXXXXXXXXX as arrears (the "Arrears") for the months of XXXXXXXXXX (i.e., $XXXXXXXXXX for each of the three months). However, the Order also indicated that the payment of the Arrears was suspended until a hearing was held in respect of the Arrears.

You have requested our views on whether the Arrears are "payable" for the purposes of paragraph 60(b) of the Income Tax Act (the "Act").

In connection with the Arrears, you indicated to us in our telephone conversation on May 3, 2001 (Eisner/Bulger) that Individual A verbally advised you that the hearing was held in XXXXXXXXXX and that it was concluded that Individual A was not required to pay the Arrears to Individual B.

Our Comments

In our view, as the payment of the Arrears was specifically suspended by the Order until a further hearing on the issue, the Arrears are not "payable" under the Order for purposes of paragraph 60(b) of the Act. We would also note that, in any event, even if the Arrears of $XXXXXXXXXX had been "payable" under the Order, they still could not qualify as a "support amount" (and, therefore, also not qualify as "child support amount"), as defined in subsection 56.1(4) of the Act for purposes of paragraph 60(b) of the Act, as these Arrears are for a period which is prior to the Order. As indicated in paragraph 22 of Interpretation Bulletin IT-530, a lump sum payment that a court order requires to be made in respect of a period prior to the date of the order does not qualify as periodic payments.

For your information, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the legislation Access Database (LAD) on the CCRA's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at (613) 957-0682. The severed copy will be sent to you for delivery to the client.

We trust that these comments will be of assistance.

Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

- 2 -