Marchand v. The Queen, docket 2001-4103(IT)I (Informal Procedure)

Date: 20021209

Docket: 2001-4103-IT-I

BETWEEN:

JACQUELINE J. MARCHAND,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Little, J.

FACTS

[1]            The Appellant and Brent Lynn Marchand (the "Former Spouse") were married on the 20th day of April 1985.

[2]            The Appellant and the Former Spouse had two children from their marriage: Caylin Jessie born on July 16, 1988 and Ethan Joseph born on July 11, 1990.

[3]            On November 17, 1994, Mr. Justice Murray of the Court of Queen's Bench of Alberta issued an Order. The Order read (in part) as follows:

(i)            The Appellant and the Former Spouse were to be divorced on the 31st day after the day that the Judgment is rendered i.e., 31 days after November 17, 1994.

(ii)           The Former Spouse was ordered to pay to the Appellant child support in respect of the children in the amount of $300.00 per month per child for a total of $600.00 per month commencing on the 1st day of December 1994.

[4]            The Appellant had discretion as to the use of the child support that was paid to her.

[5]            No joint election was filed by the Appellant and the Former Spouse with the Minister of National Revenue (the "Minister") in prescribed form specifying a commencement day of the Order.

[6]            In the 1999 and 2000 taxation years, the Appellant received child support payments from the Former Spouse pursuant to the Order as follows:

                                                1999                                         $7,000.00

                                                2000                                         $7,200.00

[7]            The Appellant did not report the child support payments referred to above in determining her income for the 1999 and 2000 taxation years.

[8]            The Minister issued a Notice of Reassessment on the 15th day of May 2001 which included the amount of $7,000.00 in the Appellant's income for the 1999 taxation year. The Minister issued a Notice of Reassessment on the 11th day of September 2001 which included the amount of $7,200.00 in the Appellant's income for the 2000 taxation year.

[9]            The Appellant filed Notices of Appeal to the said reassessments issued for the 1999 and 2000 taxation years.

ISSUE

[10]          Is the Appellant required to include the child support payments of $7,000.00 and $7,200.00 in her income for the 1999 and 2000 taxation years respectively?

ANALYSIS

[11]          Under what has been described as the "old regime" (pre-May 1997) spouses making payments to separated or ex-spouses for the support of the children were allowed by the provisions of the Income Tax Act (the "Act") to deduct those payments in determining their income and the recipient was required to include the amount of the payments in determining their income. Following the decision of the Supreme Court of Canada in Thibaudeau v. Canada [1995] 2. S.C.R. 627, the Act was amended and new provisions were introduced to deal with child support payments.

[12]          The amended Act provided that if a pre-May 1997 Order or agreement remained unchanged the deduction/inclusion system as provided by the old regime prevailed. However, if a new Order was issued or a new agreement was entered into by the parties, or if an old agreement was changed in a particular way, the deduction/inclusion regime did not apply and old child support payments made up to the commencement day, as defined were deductible from income by the payor and included in income by the payee.

[13]          In this situation the Order of the Court dated November 17, 1994 has never been changed and the child support payments made in 1999 were made pursuant to that Order. It therefore follows that the Appellant is required to include the amounts of $7,000.00 and $7,200.00 in determining her income for the 1999 and 2000 taxation years respectively.

[14]          The appeals are dismissed.

Signed at Vancouver, British Columbia, this 9th day of December 2002.

"L.M. Little"

J.T.C.C.

COURT FILE NO.:                                                 2001-4103(IT)I

                                                                                               

STYLE OF CAUSE:                                               Jacqueline J. Marchand and

                                                                                                Her Majesty the Queen

PLACE OF HEARING:                                         Edmonton, Alberta

DATE OF HEARING:                                           October 17, 2002

REASONS FOR JUDGMENT BY:      The Honourable Judge L.M. Little

DATE OF AMENDED JUDGMENT: December 9, 2002

APPEARANCES:

For the Appellant:                                                 The Appellant herself

Agent for the Respondent:                 Elena Sacleuti

COUNSEL OF RECORD:

For the Appellant:                

Name:                               

Firm:                 

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                                Ottawa, Canada

2001-4103(IT)I

BETWEEN:

JACQUELINE J. MARCHAND,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeals heard on October 17, 2002, at Edmonton, Alberta, by

the Honourable Judge L.M. Little

Appearances

For the Appellant:                                                 The Appellant herself

Agent for the Respondent:                 Elena Sacleuti (Student-at-law)

AMENDED JUDGMENT

The appeals from the assessments made under the Income Tax Act for the 1999 and 2000 taxation years are dismissed in accordance with the attached Reasons for Judgment.

                This Judgment is issued in substitution for the Judgment dated the 24th day of October 2002.

Signed at Vancouver, British Columbia, this 9th day of December 2002.

"L.M. Little"

J.T.C.C.