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.
973302
XXXXXXXXXX G. Moore
February 10, 1998
Dear XXXXXXXXXX:
Re: Advance Income Tax Ruling Request
XXXXXXXXXX
This is in reply to your letter of December 10, 1997, in which you requested an advance income tax ruling regarding child support payments.
We understand the facts of the situation as follows:
XXXXXXXXXX
We understand your main concern to be whether the order that will eventually be released by the Court of Appeal of Ontario will be considered an order made after April 1997, for the purposes of the definition of “commencement day” in subsection 56.1(4) of the Income Tax Act (the “Act”) and therefore any child support payments made pursuant to the new order would not be deductible by the payer and not included in the recipient’s income (hereafter called the “new rules”). Essentially, you are requesting that we issue an advance income tax ruling confirming that the court order that eventually will be released by the Court of Appeal of Ontario will not be considered to be a court order made after April 1997 for purposes of the new rules. You are requesting that you continue to be allowed to deduct monthly amounts (pursuant to the “old rules” wherein a payer of alimony or maintenance is entitled to a deduction for periodic payments made as an allowance under a court order or written agreement and the recipient is required to include such payments in income) required to be paid pursuant to the court order that eventually will be released by the Court of Appeal of Ontario. In addition, you are also requesting technical interpretations regarding three different scenarios.
We are unable to provide the requested rulings since part of the transaction is completed with the issuance of the court judgement dated XXXXXXXXXX. As well, all the material facts are not yet known because a final determination of the agreement between you and your former spouse has not been established. We can, however, offer the following general comments.
As you know, under the new rules, by virtue of the definition of “commencement day” in subsection 56.1(4) of the Act, a taxpayer is no longer entitled to a deduction for the maintenance of children of the recipient if the amounts are payable under:
a court order or written agreement made after April 1997; or a court order or written agreement made, or deemed to have been made, before May 1997, where the order or agreement has a commencement day. Child support amounts paid on or after the commencement day in respect of periods that began on or after that day are not deductible.
For a court order made after April 1997, the “commencement day” would be the day the court order is made. Based on a review of the facts you have presented to us, it would appear that the new child support rules would apply to the new court order once it is released since it would be a court order made after May 1, 1997. The effect of this would be to eliminate both the requirement to include child support in your ex-wife’s income and the deduction available to you for child support.
You have asked for our comments regarding three possible scenarios under which the court may or may not order your ex-wife to repay the excess support payments made since XXXXXXXXXX. The issue of repayment has not been addressed in the Reasons of Judgement dated XXXXXXXXXX, issued by the Court of Appeal for Ontario. We are unable to comment on the alternative courses of action you described as the tax consequences would depend on the court order, once it is issued.
Your deposit will be sent to you under separate cover. We trust our comments will be of assistance to you. Please note that these comments represent our opinion of the law as it applies generally and, as stated in Information Circular 70-6R3, are not binding on the Department.
Yours truly,
John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
.../cont’d
- 3 -
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1998
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1998
Email this Content