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:
Where a pre-May 1997 support order is appealed and, in a post-April 1997 order, the appeal court alters the amount to be paid as ordered by the lower court, can the post-April 1997 order be deemed, by the appeal court, to be “made” before May 1997 (i.e., at the same date as the order of the lower court) for income tax purposes (and therefore be subject to the old child support rules)?
Position TAKEN:
No (subject to the application of subsections 56.1(3) and 60.1(3)).
Reasons FOR POSITION TAKEN:
Generally, an order is “made” when it is rendered, and this may not be the same date that the court order has legal force and effect. Accordingly, the fact that a court order made or rendered after April 1997 presumes or stipulates that child support amounts payable and receivable thereunder will be subject to the old rules, or deems itself to be made before May 1997, does not result in the order being “made” before May 1997 for purposes of the Act (subject, of course, to the application of subsections 56.1(3) and 60.1(3) of the Act). In our view, such a deeming provision in a child support order cannot circumvent express legislation contained in the Act.
Ms. Lise Lafrenière Henrie
Senior Counsel
Co-ordinator, Legal Policy
Child Support Team
Department of Justice 5-991084
284 Wellington Street M. Azzi
Ottawa ON K1A 0H8
June 28, 1999
Dear Ms. Lafrenière Henrie:
Re: Child Support
Dennis v. Wilson
This is in reply to your letter of March 24, 1999, which was forwarded to us for reply by Ms. Maureen Tapp, Director in our Benefit Programs Directorate. Your letter concerns the Ontario Court of Appeal (the “OCA”) decision in Dennis v. Wilson, dated November 23, 1998. In that decision, the OCA essentially indicated that, where a pre-May 1997 support order is appealed and, in a post-April 1997 order, the appeal court alters the amount to be paid as ordered by the lower court, the post-April 1997 order can be deemed, by the appeal court, to be “made” before May 1997 (i.e., at the same date as the order of the lower court) for income tax purposes (in addition to Family Law purposes).
In summary, the above-noted case involved a June 15, 1995 variance order issued by the Ontario Court (General Division) which required Mr. Wilson to pay child support in the amount of $3900 per month. Mr. Wilson appealed the variation order to the OCA, which heard the case after April 1997 and issued its reasons for judgment on November 17, 1997 indicating that the payment required for child support would be $2400 per month with income tax to be paid by Ms. Dennis. The OCA issued, on November 23, 1998, an addendum to the reasons released on November 17, 1997 “to the effect that a declaratory order will issue to the effect that our order was ‘made’ as of June 15, 1995”. The intention of the declaratory order is to circumvent the new child support rules; however, the OCA did recognize that it “has no jurisdiction to decide appeals provided for in the Income Tax Act”.
As you know, generally, the new child support rules apply to agreements or court orders “made” after April 1997. Accordingly, where a child support order is made after April 1997, and does not have a retroactive provision such that subsections 56.1(3) and 60.1(3) of Income Tax Act (the “Act”) do not apply to deem the order to have been made before May 1997, the order is generally considered to be an order made after April 1997 and, therefore, has a “commencement day” within subsection 56.1(4) of the Act and is subject to the new rules.
In our view, the tax consequences of a child support order do not arise merely because the court order has so stipulated, but rather because it meets the criteria for income inclusion or deductibility set out in the relevant provisions of the Act. In this regard, it is our view that, generally, an order is “made” when it is rendered, and this may not be the same date that the court order has legal force and effect. Accordingly, the fact that a court order made or rendered after April 1997 presumes or stipulates that child support amounts payable and receivable thereunder will be subject to the old rules, or deems itself to be made before May 1997, does not result in the order being “made” before May 1997 for purposes of the Act (subject, of course, to the application of subsections 56.1(3) and 60.1(3) of the Act). In our view, such a deeming provision in a child support order cannot circumvent express legislation contained in the Act. That is, the deeming provision cannot circumvent the application of the new child support rules.
We trust that these comments will be of assistance.
Yours truly,
Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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