2 June 1992 Income Tax Severed Letter 9210845 - Separation Agreements

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.

SUBJECT: SEPARATION AGREEMENTS PRENUPTIAL AGREEMENTS LIVING APART SECTION: 56(1)(b), 60(b)]

921084
R.B. Day
(613) 957-2136

June 2, 1992

Dear XXX:

Re: Separation Agreements and Paragraphs 56(1)(b) and 60(b) of the Income Tax Act (the "Act")

We are writing in reply to your letter of April 6, 1992, wherein you requested clarification of the Department's policy regarding the deductibility of spousal and child support payments made pursuant to an agreement entered into in contemplation of marriage (the Agreement). Such agreements often set out the terms that are to apply in the event of separation.

In this regard you have requested that we confirm your view that "if two spouses had entered into an Agreement before or after marriage but before separation and which contemplated possible separation in the future and provided for mutual rights and obligations to arise should the parties commence to live separate and apart, and if those spouses subsequently commenced to live separate and apart and were complying with the terms of the Agreement relating to separation, then they would be considered to be 'separated pursuant to a written separation agreement' within the meaning of paragraphs 56(1)(b) and 60(b) of the Act."

Our Comments

We are unable to confirm your views in this regard.

It is our opinion that an Agreement, although containing a contingency provision regarding the possibility of a future separation, would not be considered to be a "written separation agreement" as envisioned by paragraph 56(1)(b) and 60(b) of the Act and as interpreted by the courts in the cases cited in your letter. It is our view that an Agreement would require amendment or a covenant executed at the time of, or subsequent to, actual separation of the spouses invoking the separation conditions in the Agreement including an agreement to live separate and apart, before such a document could begin to be considered to be a "written separation agreement" for purposes of paragraphs 56(1)(b) and 60(b) of the Act. In view of the foregoing, we believe that the comments in paragraph 5 of IT-118R3 continue to reflect the proper interpretation of these provisions.

We trust our comments will be of assistance to you.

Yours truly,

J.A. Szeszycki
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch