3 June 2010 External T.I. 2009-0349901E5 - Meaning of "normally be duly signed"

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.

Principal Issues: 1 - Meaning of "should normally be duly signed and dated" in IT-530R. 2 - What types of documents would qualify as a written agreement?

Position: Question of fact.

Reasons: While an agreement does not have to be signed to be binding, in accordance with IT-530, the correspondence must detail all terms and conditions showing intent to create a binding agreement and demonstrate acceptance by both parties.

XXXXXXXXXX
									2009-034990
									Phyllis Waugh
June 3, 2010

Dear XXXXXXXXXX :

Re: IT-530R, Support Payments

I am writing in reply to your email of November 30, 2009 requesting an explanation for the phrase "should normally be duly signed and dated" in Interpretation Bulletin IT-530R, Support Payments. In addition, you have asked in what situation can documents that are not signed be sufficient as a written agreement and what types of documents would be acceptable.

Our Comments

The situation described in your email relates to a general enquiry and a technical interpretation can only be provided in the context of an advance income tax ruling. For more information about how to obtain a ruling, please refer to Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. This Information Circular and other Canada Revenue Agency publications can be accessed on the internet at http://www.cra-arc.gc.ca. Although we cannot comment on general enquiries, we are prepared to provide the following general comments, which may be of assistance.

Paragraph 13 of Interpretation Bulletin IT-530R, Support Payments, states "a written agreement may take the form of a written document under which a person agrees to make regular payments to maintain his or her current or former spouse or common-law partner, children of his or her current or former spouse or common-law partner, or both. The agreement should normally be duly signed and dated by both parties." This last statement means that a written agreement does not necessitate the signature of the parties. However, as noted in paragraph 13,

"an exchange of written correspondence between the parties or their respective solicitors may be considered to be a written agreement if:

there was the intention to create a binding and enforceable contractual relation;

• the exchange of written correspondence outlines all of the essential terms and conditions of the agreement in a clear and unambiguous manner; and
• there is a clear and unequivocal acceptance in writing by both parties of all those terms and conditions."

Whether documents would suffice as a written agreement is a question of fact depending on the language used and the terms specified in the documents. A determination could only be made after a review of the documents and circumstances of each case. While there is no requirement that the documents be signed, the other conditions must be present: the written documents must show a clear intention to create a binding and enforceable contractual relation, outline all the essential terms and conditions of the agreement, and demonstrate an acceptance in writing by both parties of the terms and conditions.

We trust the above comments will be of assistance.

Yours truly,

Randy Hewlett
Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch