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:
An agreement provided that an individual was to make monthly child support payments to his former spouse of $400. The agreement also included a clause which provided that the amount of the monthly child support would be reviewed by the Individual and the former spouse every six months. For each of the years 1985 to 1991, the individual paid support to the former spouse support that was excess of $4,800. Is the former spouse required to report amounts in excess of $4,800 for each of the years in question?.
Position: No
Reasons:
Paragraph 56(1)(b) of the Income Tax Act requires that the amounts be paid "under a written agreement".
December 24, 1997
XXXXXXXXXX Tax Services Office HEADQUARTERS
XXXXXXXXXX M. Eisner
Client Services Division (613) 957-2138
971831
Child Support - XXXXXXXXXX (the Individual)
This is in reply to your memorandum of July 2, 1997, in which you asked for our comments concerning the amounts of child support that the Individual is required to include in income for the years 1985 to 1991.
The Individual and her former spouse entered into a separation agreement (the Agreement) in 1981. The Agreement provided for a monthly payment of $400 by the former spouse to the Individual in respect of child support for their three children. The Agreement also included a term which provided that the amount of the monthly child support would be reviewed by the Individual and her former spouse every six months.
For the years 1985 to 1991, the Individual respectively included the amounts of $5,400, $5,700, $5,800, $6,000, $6,750, $7,200, and $7,200 in income under paragraph 56(1)(b) of the Act. For those same years, the former spouse respectively claimed the amounts of $6,479, $6,975, $6,770, $6,665, $7,258, $7,620, and $7,865 under paragraph 60(b) of the Act.
With respect to the above circumstances, you have referred to paragraph 9 of Interpretation Bulletin IT-118R3 "Alimony and Maintenance." This paragraph indicates that a specified sum of money, which may be subject to adjustment in accordance with some reasonable formula or index, may qualify as an allowance even though the exact future amounts payable are not specified in the agreement. In relation to these comments, you have asked us whether the Individual was required, under paragraph 56(1)(b) of the Act, to include the amount of $4,800 in her income for each of the years 1985 to 1991 or the amounts she reported that are set out in the preceding paragraph.
Paragraph 56(1)(b) of the Act as it then applied, sets out the condition that the amount must be paid "under a written agreement". This is explained in paragraph 2(c) of IT-118R3 which, in respect of paragraph 56(1)(b) of the Act, requires that the amount be paid pursuant to a decree, order, or judgment of a competent tribunal or pursuant to a written agreement. In the Individual's situation, it is not possible to determine a quantum, for any of the years in question in respect of the support payments that were to be paid under the Agreement, that is in excess of the monthly amount of $400. Accordingly, it is our view that the Individual is only required to include the amount of $4,800 in income under paragraph 56(1)(b) of the Act for each of the years 1985 to 1991.
If you require further technical assistance, we would be pleased to provide our views.
John F. Oulton
Section Chief
Business, Property & Employment Section II
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
.../cont’d
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