Date:
20020719
Docket:
2001-2062-IT-I
BETWEEN:
DAVID
AMBURY,
Appellant,
and
HER MAJESTY THE
QUEEN,
Respondent.
Reasons for
Judgment
Bowie
J.
[1] These appeals are from
reassessments for income tax for the taxation years 1998 and
1999. By those reassessments, the Minister of National Revenue
disallowed the Appellant's claim that in computing his income he
is entitled to deduct the amounts paid by him for child support.
The appeals were heard at Thunder Bay, Ontario under the informal
procedure.
[2] The facts are not in dispute. The Appellant is the natural
father of a child. He and the child's mother have never been
married, nor have they lived together in a conjugal relationship.
The Appellant recognized his responsibility for the support of
the child, and in 1996 he and the mother entered into a written
agreement providing that he would make periodic payments to her
for that purpose. The agreement was filed in the Ontario Court of
Justice (Provincial Division). The taxpayer made the payments
required of him under that agreement, and he claimed to deduct
these amounts under section 60 of the Income Tax Act (the Act) when
computing his income for the year. The Minister disallowed the
deductions, giving rise to this appeal.
[3] The
point in issue is a very narrow one. Paragraph 60(b) of
the Act provides that a taxpayer may deduct support
amounts according to a formula set out there.
60 There may be
deducted in computing a taxpayer's income for a taxation year
such of the following amounts as are applicable:
(b)
Support - the total of all amounts each of which is an amount
determined by the formula
A - (B +
C)
where
A is the
total of all amounts each of which is a support amount paid after
1996 ...
[the rest of
the formula is not relevant to these appeals]
The question is whether the
amounts that the Appellant paid can be said to come within the
definition of the expression "support amount". That expression is
defined for the purposes of both sections 56 and 60 in subsection
56.1(4).
56.1(4)
The definitions in this subsection apply in this section and
section 56.
"support amount"
means an amount payable or receivable as an allowance on a
periodic basis for the maintenance of the recipient, children of
the recipient or both the recipient and children of the
recipient, if the recipient has discretion as to the use of the
amount, and
(a) the
recipient is the spouse or former spouse of the payer, the
recipient and payer are living separate and apart because of the
breakdown of their marriage and the amount is receivable under an
order of a competent tribunal or under a written agreement;
or
(b) the
payer is a natural parent of a child of the recipient and the
amount is receivable under an order made by a competent tribunal
in accordance with the laws of a province.
In order to be deductible, then,
the maintenance payments must have been made, and receivable,
under an order made by a competent tribunal in accordance with
the laws of Ontario. Mr. Strickland argues that this requirement
is satisfied in the present case, by the operation of subsections
35(1) and (2) of the Family Law Act of Ontario, and the definition of
support order found in section 1 of the Family Responsibility
and Support Arrears Enforcement Act(the FRSAE Act).
These provisions read:
Family Law
Act
35(1) A person who is a party to a
domestic contract or paternity agreement may file the contract or
agreement with the clerk of the Ontario Court (Provincial
Division) or of the Unified Family Court together with the
person's affidavit stating that the contract or agreement is
in effect and has not been set aside or varied by a court or
agreement.
35(2) A provision for support or
maintenance contained in a contract or agreement that is filed in
this manner,
(a) may be
enforced;
(b) may be
varied under section 37; and
(c) except
in the case of a provision for the support of a child, may be
increased under section 38,
as if it were
an order of the court where it is filed.
Family
Responsibility and Support Arrears Enforcement Act
1(1) In this
Act,
...
"support
order" means a provision in an order made in or outside Ontario
and enforceable in Ontario for the payment of money as support or
maintenance, and includes a provision for,
(a) the
payment of an amount periodically, whether annually or otherwise
and whether for an indefinite or limited period, or until the
happening of a specified event,
(b) a lump
sum to be paid or held in trust,
(c)
payment of support or maintenance in respect of a period before
the date of the order,
(d)
payment to an agency of an amount in reimbursement for a benefit
or assistance provided to a party under a statute, including a
benefit or assistance provided before the date of the
order,
(e)
payment or expenses in respect of a child's prenatal care and
birth,
(f) the
irrevocable designation, by a spouse who has a policy of life
insurance or an interest in a benefit plan, of the other spouse
or a child as the beneficiary, or
(g)
interest or the payment of legal fees or other expenses arising
in relation to support or maintenance,
and includes
such a provision in a domestic contract or paternity agreement
that is enforceable under section 35 of the Family Law
Act.
Mr. Strickland contends that
these provisions, as he put it, raise the agreement under which
the payments were made to the status of an order of a court made
under the laws of the province of Ontario.
[3] Subsections 21(1) and
(8) of the FRSAE Act should be noted as well.
21(1) A support deduction order shall be
deemed to have been made in respect of a support order described
in subsection (8) if,
(a) the
recipient requests that the Director enforce the support order
under this Part and the Director considers it practical to do so;
or
(b) the
Director considers it advisable to enforce the support order
under this Part.
21(8) This section applies only to
support orders filed in the Director's office that
are,
(a)
support orders made by an Ontario court before March 1,
1992;
(b)
domestic contracts or paternity agreements that are enforceable
under section 35 of the Family Law Act;
(c)
support orders made by a court outside Ontario that are
enforceable in Ontario.
The evidence before me does not
disclose whether either of these conditions had been met in the
present case, but for purposes of these Reasons I shall assume
that they were.
[4] Mr. Strickland relies
on the judgment of Teskey J. in Hollands v. The Queen. That case arose under
the Maintenance Enforcement Act (the MEA)of
Alberta, section 12 of which provides that an agreement to pay
maintenance may be filed in the Alberta Court of Queen's Bench,
whereupon it is deemed to be a court order. Judge Teskey held in
that case that this deeming provision had the effect of making
the agreement an order made by a competent tribunal in accordance
with the laws of the province of Alberta for purposes of the
definition of "support amount" found in the Income Tax
Act. Associate Chief Judge Bowman has taken a different view
of the effect of section 12 of the MEA, as have I.
[5] In Hewko,
where the facts were indistinguishable from the present case, and
from those in Hollands, I said:
[7] A provincial
legislature may, as to subject matters assigned to the provinces
by section 92 of the Constitution Act, 1867, deem a thing
to be that which in reality it is not. Provided that deeming is
not a colourable intrusion upon the legislative field assigned to
Parliament, it can be effective for all purposes, if that is what
the legislature intends. In such a case, the legal status of the
thing deemed is established by the provincial law, for purposes
of both federal and provincial statutes. However, as Bowman
A.C.J. pointed out in Fantini, the extent to which the
deeming applies must be ascertained as a matter of construction
of the provincial legislation. It is quite clear, in my view,
from both the context and the language of subsection 1(2) of the
MEA, that its operation is limited to the confines of that
act. First, it is found in a section which deals with
definitions. That suggests that its operation is limited to the
act in which it is found. Second, the agreement is deemed to be a
maintenance order "under this Act". That,
too, suggests that the operation of the deeming provision is
limited to the purposes of the MEA. Its purpose is to
bring an agreement within the expression "maintenance
order", which is defined immediately above to mean one of a
number of types of orders there referred to, including orders of
courts outside the province that have been registered under the
Reciprocal Enforcement of Maintenance Orders Act. The
MEA creates an office called the Director of Maintenance
Enforcement. Its whole purpose is to provide for the enforcement
of certain types of court orders by the Director, for the benefit
of children, spouses and former spouses who are the beneficiaries
of those orders. For that purpose, the Director is given certain
powers, and it is only for that purpose that the agreement here
in question, as well as agreements made under the Income
Support Recovery Act and the Child Welfare Act, are
deemed to be within the expression "maintenance order" when it is
used in the MEA.
[8] Does section
12, which deems a
maintenance order filed with the Court of Queen's Bench to be
a judgment of that Court, have effect beyond the confines of the MEA? I do not
believe it does. Standing alone, it might appear to, but it must
be read with section 1. If the deeming of the agreement to
be a maintenance order is limited to the
purposes of the MEA, then the operation of section 12 on
that Order must equally be limited. I conclude, therefore, that
the agreement pursuant to which the Appellant made the
maintenance payments is not "¼an
order made by a competent tribunal in accordance with the laws of
a province ¼" for
purposes of the Income Tax Act.
Exactly the same reasoning
applies to the Ontario legislation. Although there are
differences in form, the legislative intent is clearly the same,
and the Ontario statutes, like the Alberta statutes, are not
intended to change the nature and character of a child support
agreement, but merely to provide for the enforcement of it
through the same mechanism that is available for the enforcement
of court orders in the province.
[6] Subsections 35(1) and
(2) of the Family Law Act do no more than provide for
enforcement of a paternity agreement. They have no deeming
effect. Section 1 of the FRSAE Act is limited in its
effect by the opening words "In this Act". Its inclusion
of a paternity agreement within the meaning of the expression
"support order" is thus effective only for the purposes of that
statute. Subsection 21(1) of the FRSAE Act is a deeming
provision, but it must be viewed in the context of the FRSAE
Act as a whole. Its purpose is clearly limited to providing
for the enforcement of paternity agreements (as well as the two
classes of orders referred to in paragraphs 21(8)(a) and
(c)) by the Family Responsibility Office, and making the
processes of the Ontario Court available to the Director of that
Office for that purpose. I am therefore unable to agree with the
submission that these provisions effectively raise the paternity
agreement to the status of an order made by a court for other
purposes, and so the appeals must be dismissed.
[7] I cannot leave this case
without expressing some regret that fathers like Mr. Ambury who
willingly recognize and fulfill their obligations to children are
denied the deduction to which they would be entitled if they
resisted those obligations until a court ordered them to make
support payments. There is no apparent policy rationale for
denying the deduction to taxpayers who enter into paternity
agreements voluntarily. A search of Hansard discloses
none. As many paternity agreements entered into before 1997 still
have many years to run, it may be that Parliament will consider
putting supporting parents who have not been married to or
cohabited with the other parent on an equal footing with those
who have.
Signed at Ottawa, Canada,
this 19th day of July, 2002.
J.T.C.C.
COURT FILE
NO.:
2001-2062(IT)I
STYLE OF
CAUSE:
David Ambury and Her Majesty the Queen
PLACE OF
HEARING:
Thunder Bay, Ontario
DATE OF
HEARING:
June 13, 2002
REASONS FOR JUDGMENT
BY: The Honourable Judge E.A. Bowie
DATE OF
JUDGMENT:
July 19, 2002
APPEARANCES:
Counsel for the
Appellant: T.
Michael Strickland
Counsel for the
Respondent: Tracey
Harwood-Jones
COUNSEL OF
RECORD:
For the
Appellant:
Name:
T. Michael Strickland
Firm:
Buset & Partners
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-2062(IT)I
BETWEEN:
DAVID
AMBURY,
Appellant,
and
HER MAJESTY THE
QUEEN,
Respondent.
Appeals heard on June
13, 2002, at Thunder Bay, Ontario, by
the Honourable Judge
E.A. Bowie
Appearances
Counsel for the
Appellant:
T. Michael Strickland
Counsel for the
Respondent:
Tracey Harwood-Jones
JUDGMENT
The appeals from assessments of tax made under the Income Tax
Act for the 1998 and 1999 taxation years are
dismissed.
Signed at Ottawa, Canada,
this 19th day of July, 2002.
J.T.C.C.
Email this Content