2 July 1991 Ministerial Correspondence 911364 F - Alimony and Maintenance 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.

Subject: Alimony and Maintenance Payments 19(1)   (the "Taxpayer")

This is in reply to your memorandum dated May 15, 1991 wherein you requested our opinion concerning the deductibility of certain payments made by the Taxpayer as alimony and maintenance payments.

The payments in question were made pursuant to paragraph 6.6 of the written separation agreement (the "Agreement") dated   24(1)     which reads as follows:

24(1)

Our Comments

In order for the payments to be deductible by the Taxpayer, they would have to come within the specific requirements of subsection 60(b) of the Income Tax Act (the "Act"). Under this subsection, an amount paid is deductible by the payer in the year paid (and is included in the income of the payer's spouse or former spouse under paragraph 56(1)(b) of the Act) if all of the following requirements are met: 60(b), 56(1)(b)

a)     the amount is paid as alimony or other allowance for the maintenance of the spouse (or former spouse), children of the marriage, or both;

b)     the spouses (or former spouses) are living apart at the time the payment is made and throughout the remainder of the year pursuant to a divorce, judicial separation, or written separation agreement;

c)      the amount is paid pursuant to a decree, order or judgement of a competent tribunal or pursuant to a written agreement;

d)        the payment is one of a series payable on a periodic basis; and

e)        the amount is paid or deemed to be paid to the spouse or former spouse.

In our view, the payments in question do not satisfy the requirement of d) above and therefore the payments could not be deductible under subsection 60(b) of the Act.

We also considered whether or not the payments might be deductible by the payer if they met the criteria set out in subsections 60.1(1) or (2) of the Act.  In order for the payments in question to be deductible through the qualifying provisions of subsection 60.1(1), the payments must be made as an allowance paid on a periodic basis for the maintenance of the spouse and/or the children in the custody of the spouse.

However, it does not appear from the wording of the separation agreement that the spouse may, at her discretion, request that the amounts be paid to her directly.  Accordingly, the payments are not deductible under this provision.

In order for the payments to be deductible through the qualifying provisions of subsection 60.1(2) the payment of expenses must be for the maintenance of the spouse and/or the children and the separation agreement or court order must specify that the provisions of 60.1(2) and 56.1(2) apply to the payments. No such references appear in the Agreement in question.  As a consequence, the payments would not qualify for deduction under subsection 60.1(2).

In our view, as the payments in question are not deductible to the Taxpayer under any of the relevant provisions, the Taxpayer could not arbitrarily, at his option, deduct the payments and have them included in the recipient's income by means of a provision in the agreement if they do not otherwise qualify for such treatment under the Income Tax Act.

In summary, we conclude that none of the payments for the "adjustable expenses" set out in the Agreement under review meet the test for deductibility pursuant to subsection 60(b), as  qualified by section 60.1.

P.D. FuocoChiefPersonal and General SectionBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch