16 December 1997 Internal T.I. 9721777 - CHILD SUPPORT

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:

Whether an individual is entitled to deduct child maintenance of $XXXXXXXXXX in 1995 and 1996.

Position:

No

Reasons:

The clause in the separation agreement, which provided for payments in respect of the child up to the age of 23, expired in 1993 and the agreement was not revised in writing to provide for payments to be made by the individual to the former spouse subsequent to that time.

		December 16, 1997

	XXXXXXXXXX Tax Services Office 	HEADQUARTERS
	XXXXXXXXXX	M. Eisner
	Technical and Resources Division	(613) 957-2138
		972177

Alimony and Maintenance - XXXXXXXXXX (the Individual)

This is in reply to your submission of August 11, 1997, in which you asked for our comments on whether the Individual is entitled to deduct child maintenance payments of $XXXXXXXXXX made in each of 1995 and 1996.

The Individual and his former spouse entered into a separation agreement in 1986, which was amended in 1987 (hereinafter referred to as the Agreement), and provided for the payment of child support in respect of their three children. Under the Agreement, the Individual was required to pay $XXXXXXXXXX ($XXXXXXXXXX for each child) each month to the former spouse. The payments were subject to indexing and there was a provision in the Agreement for variation "by reason of a material change in marital circumstances." The Individual and the former spouse were granted joint custody of their three children who resided primarily with the former spouse. The payments were to cease when certain events occurred, including when a child reached the age of 23.

Payments ceased with respect to two of the children a number of years ago. The remaining child (the Child) for whom payments were made in 1995 and 1996 after she was 23, was born on XXXXXXXXXX, is mentally impaired, and is unable to live alone. Since the middle of 1996, the Child has been receiving a monthly amount of $XXXXXXXXXX from the Ontario Government.

During 1994, the former spouse moved to XXXXXXXXXX. The individual has submitted that the former spouse resides in XXXXXXXXXX and has severed all ties with Canada for income tax purposes. The Child was enrolled at an educational institution in Canada and continued to live in the former spouse's home with the assistance of a helper/guardian. The Individual and the former spouse have indicated that, although the Child is beyond the age (23) stipulated in the Agreement, the Individual continued to make payments ($XXXXXXXXXX each month) during 1995 and 1996 to the former spouse pursuant to the material change in marital status clause of the Agreement. It was submitted that the material change was the relocation of the former spouse to XXXXXXXXXX, but with retention of her full responsibilities for the Child who continued to live in her residence in XXXXXXXXXX, Ontario. The former spouse indicated that the payments were made for the Child's benefit and were essential for her stability and psychological well-being. Although both the Individual and the former spouse have indicated that the payments were made under the term in the Agreement concerning a material change in marital circumstances, the agreement between these two parties with respect to the amount of the child maintenance was verbal in nature.

The Individual has indicated that he was erroneously informed that he could not claim the payments made to the former spouse because his former spouse, who lives in XXXXXXXXXX, would not be taxable in respect of the payments.

Our Comments

Under paragraph 60(b) of the Income Tax Act (the Act) as it applied to the 1995 and 1996 years, an individual may be entitled to deduct support payments made to a spouse or former spouse for the maintenance of the individual's children. The general requirements for the deduction of support payments under paragraph 60(b) of the Act are summarized in paragraph 2 of Interpretation Bulletin IT-118R3 "Alimony and Maintenance."

In order for an amount to be deductible under paragraph 60(b) of the Act, the amount must be "paid under a decree, order or judgment of a competent tribunal, or under a written agreement." In relation to the clause in the Agreement, which provided for payments in respect of the Child up to the age of 23, we note that it expired in 1993 and the Agreement was not revised in writing to provide for the payments to be made by the Individual to the former spouse subsequent to that time by virtue of the change in marital circumstances clause in the Amended Agreement. Accordingly, it is our view that the payments made by the Individual in 1995 and 1996 as a result of an oral agreement are not deductible under paragraph 60(b) of the Act.

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

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