Citation: 2011TCC551
Date: 20111201
Docket: 2011-1802(IT)I
BETWEEN:
ALLAN H. KERR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
V.A. Miller J.
[1]
The issue in this
appeal is whether the Appellant is entitled to deduct the amounts of $7,487 and
$7,654 as child support payments in 2008 and 2009 respectively.
[2]
The parties submitted a
Statement of Agreed Facts (Partial) which basically reiterates the facts
assumed by the Minister of National Revenue (the “Minister”) when he assessed
the Appellant. It reads:
1.
The Minister of National Revenue (the
“Minister”) initially assessed the appellant’s 2008 income tax liability and
disallowed child support payments claimed in the amount of $7,487.
2.
The Minister initially assessed the appellant’s
2009 income tax liability and disallowed child support payments claimed in the
amount of $7,654.
3.
The Minister confirmed the assessments for the
2008 and 2009 taxation years.
4.
The appellant and Louise Carrie (the “Former
spouse”) were living separate and apart since November 1995.
5.
The appellant and the Former Spouse had a child,
namely J.C., born in 1994 (the “Child”).
6.
Pursuant to an order of the Ontario Court of
Justice (General division) dated June 18, 1996 (the “Order”), the appellant was
required to make monthly support payments in the amount of $350 to the Former spouse
with respect to the Child (the “Support payments”). (A copy of the June 18,
1996 Court Order is attached at Tab 1).
7.
The Order included a cost of living provision
that states the Support
payments shall be increased annually.
8.
The Family Responsibility Office (“FRO”) of the
Ministry of Community and Social Services enforced the June 18, 1996 Court
Order.
9.
The appellant and the Former spouse signed a
written Separation Agreement made May 30, 2006 (the “Agreement”) that provided
for Support payments in the amount (of) $322, commencing June 1, 2006. (A copy
of the May 30, 2006 Separation agreement is attached at Tab 2).
10.
The Agreement was not filed with the Courts.
11.
The Family Responsibility Office (“FRO”) of the
Ministry of Community and Social Services did not enforce the May 30, 2006
Separation Agreement. (A copy of a communication from the FRO to that effect is
attached at Tab 3).
12.
For the years 2008 and 2009, in addition to the Support payments, the appellant paid
outstanding support arrears through a Voluntary Arrears Payment schedule in the
fixed amount of $220 per month (the “Arrears Payment”). (A copy of a
communication from the FRO to that effect is attached at Tab 4).
13.
During the 2008 taxation year, the appellant
made Support payments including arrears through payroll deductions in the total
amount of $7,487.
14. During the 2009 taxation year, the appellant
made Support payments including
arrears through payroll deductions in the total amount of $7,654.
[3]
The Order referred to
in paragraph 6 of the Statement of Agreed Facts (Partial) contained the
following paragraph;
THIS COURT ORDERS THAT unless the
support Order is withdrawn from the office of the Family Support Plan, it shall
be enforced by the Director and amounts owing under the support Order shall be
paid to the Director, who shall pay them to the person to whom they are owed.
[4]
The support Order was
never withdrawn from the office of the Family Support
Plan. In a letter dated August 4, 2009, the Family Responsibility Office (FRO)
confirmed that it had been enforcing the Order since it was registered in
October 1996.
[5]
The Appellant described
the events which led him to sign the Separation Agreement referred to at
paragraph 9 in the Statement of Agreed Facts.
[6]
In 2006, the Appellant
did not make any Support Payments to his Former Spouse who was receiving social
assistance from the Algoma District Services Administration Board (the
“Board”). A Family Support Worker with the Board wrote to the
Appellant to inform him that she was assigned to assist his Former Spouse to
obtain child support and that he had two possible courses of action to settle
the child support. One option was to proceed through the courts, and the other
option was to work out a private written agreement between the parties. The
Appellant chose to sign the private written agreement (the “Separation
Agreement”) which provided for child support payments of $322 per month.
[7]
He respected the
Separation Agreement and made ten payments by cheques written to his Former
Spouse from June 2006 to March 2007 inclusive. He said he stopped sending the
cheques to his Former Spouse when she moved and he no longer had her address.
[8]
The Board sent the
Separation Agreement to the Family Responsibility Office (FRO) to have the
Separation Agreement enforced. The FRO was unable to enforce it as it had not
been filed with the courts.
[9]
By letter dated August
8, 2007, the Board notified the Appellant that it was authorized to receive the
Support Payments directly from the FRO as his Former Spouse had assigned her
rights under the Order to the Board. A copy of the Assignment was attached to
the letter.
[10]
The FRO set up a
Voluntary Arrears Payment Schedule with the Appellant and garnisheed his wages
in accordance with the amounts proposed by the Appellant. The garnisheed
amounts are the amounts in issue for 2008 and 2009.
[11]
It is agreed by the
parties that the Support payments in issue were paid through the
FRO and were made pursuant to the Court Order and not the Separation Agreement.
Law
[12]
Child support payments
are neither deductible by the payer nor included in the income of the recipient
if they are payable under an agreement or order with a commencement day of May
1, 1997 or later[1].
[13]
Child support amounts
payable pursuant to an agreement or order made before May 1997 are generally
deductible by the payer and included in the income of the recipient unless a
post-April 1997 “commencement day” can be attributed to the agreement.
[14]
The term “commencement
day” is defined in subsection 56.1(4) of the Act as follows:
commencement
day" at any time of an
agreement or order means
(a) where the
agreement or order is made after April 1997, the day it is made; and
(b) where the agreement
or order is made before May 1997, the day, if any, that is after April 1997 and
is the earliest of
(i) the day
specified as the commencement day of the agreement or order by the payer and
recipient under the agreement or order in a joint election filed with the
Minister in prescribed form and manner,
(ii) where the
agreement or order is varied after April 1997 to change the child support
amounts payable to the recipient, the day on which the first payment of the
varied amount is required to be made,
(iii) where a
subsequent agreement or order is made after April 1997, the effect of which is
to change the total child support amounts payable to the recipient by the
payer, the commencement day of the first such subsequent agreement or order,
and
(iv) the day
specified in the agreement or order, or any variation thereof, as the
commencement day of the agreement or order for the purposes of this Act.
[15]
It is first necessary to identify
whether the Support Payments were payable under the Order or the Separation
Agreement[2].
[16]
If the Support
Payments became payable under the Separation Agreement then there is a
“commencement day” of May 30, 2006 in accordance with paragraph 56.1(4)(a).
If the Support Payments were payable under the Order, then it is necessary to
ascertain if any of the subparagraphs in 56.1(4)(b) attribute a
“commencement day” to the Order.
[17]
It is the Appellant’s position
that the Support Payments were payable under the Order. The Respondent
did not clearly enunciate its position.
[18]
It is my view that the Appellant
is correct. There is no termination date given in the Order. There was no
evidence that the support obligation pursuant to the Order was stayed or
ceased. The Order was not varied, rescinded or suspended.
[19]
The Order could only be varied or modified
by an application to a court of competent jurisdiction in accordance with the Ontario Family
Law Act[3].
Section 37 of that Act reads:
37(1) An application to the
court for variation of an order made or confirmed under this Part may be made
by,
(a) a dependant
or respondent named in the order;
(b) a parent of
a dependant referred to in clause (a);
(c) the personal
representative of a respondent referred to in clause (a); or
(d) an agency
referred to in subsection 33 (3).
…
(2.1) In the case of an order
for support of a child, if the court is satisfied that there has been a change
in circumstances within the meaning of the child support guidelines or that
evidence not available on the previous hearing has become available, the court
may,
(a) discharge, vary or suspend
a term of the order, prospectively or retroactively;
(b) relieve the respondent from
the payment of part or all of the arrears or any interest due on them; and
(c) make any
other order for the support of a child that the court could make on an
application under section 33.
[20]
The Separation Agreement did not
and could not replace the Order or oust the obligation imposed on the Appellant
by the court Order as the Separation Agreement was not filed with the court.
[21]
Subsection 35(2) of the Family
Law Act allows for a separation agreement which is filed with the court to
be treated as if it were an order of the court.
35(1) A person who is a party to a domestic contract
may file the contract with the clerk of the Ontario Court of Justice or of the
Family Court of the Superior Court of Justice together with the person’s
affidavit stating that the contract is in effect and has not been set aside or varied
by a court or agreement.
…
Effect of filing
(2) A
provision for support or maintenance contained in a contract 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,
(d) in the case of a provision
for the support of a child, may be recalculated under section 39.1,
as if it were
an order of the court where it is filed.
[22]
As I have determined that the
Support Payments were payable under the Order, I must also determine whether
the Separation Agreement had the effect of triggering a commencement day for
the Order.
[23]
It is my view that there was no
commencement day in this case.
[24]
Subparagraphs 56.1(4)(i)
and (iv) do not apply in the circumstances of this appeal as the
Appellant and his Former spouse did not make a joint election nor did they
specify a commencement day in the Separation Agreement.
[25]
The Separation Agreement could not
vary the Order. The Order could be varied only by application to the court.
Subparagraph 56.1(4)(ii) does not apply.
[26]
The Separation Agreement does not
provide for a distinct and separate payment obligation which co-exists with the
payment obligation in the Order. As a result, the Separation Agreement cannot
establish a commencement day for the Order under subparagraph 56.1(4)(iii)
of the Act[4].
[27]
For all of these reasons, I
conclude that a commencement day was not triggered by the Separation Agreement.
The Appellant is entitled to deduct the amounts of $7,487 and $7,654 as child support payments in 2008
and 2009.
[28]
The appeal is allowed.
Signed at
Ottawa, Canada, this 1st day of December 2011.
“V.A. Miller”
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