Citation: 2009 TCC 353
Date: 20090630
Docket: 2008-199(IT)I
BETWEEN:
GEOFFREY WAYNE ELLIS,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1] The
question in this appeal is whether the appellant, Geoffrey Ellis, is entitled
to a deduction for child support payments made to his ex-spouse in 2006. The
amount of the deduction sought is $3,900.
[2] The conclusion that I have reached is that the
deduction has been correctly disallowed.
[3] Under the
relevant legislative scheme, a child support payment is deductible to a payer
only if the amount is receivable under an order of a competent tribunal or
under a written agreement. This requirement is fatal to Mr. Ellis’ claim.
[4] The
relevant legislative provisions of the Act are paragraph 60(b), the
definition of “support amount” in subsection 56.1(4) and subsection 60.1(4).
Excerpts of these provisions are reproduced below.
60. Other deductions -- There may be deducted in
computing a taxpayer's income for a taxation year such of the following amounts
as are applicable:
[…]
(b) [spousal or child] 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 and before the end of the year by the
taxpayer to a particular person, where the taxpayer and the particular person
were living separate and apart at the time the amount was paid,
[…]
56.1(4) Definitions -- 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 common-law
partner or former spouse or common-law partner of the payer, the recipient and
payer are living separate and apart because of the breakdown of their marriage
or common-law partnership and the amount is receivable under an order of a
competent tribunal or under a written agreement; or
[…]
(4)
Definitions -- The definitions in subsection 56.1(4) apply in this section and
section 60.
[Emphasis added.]
[5] The
circumstances surrounding the payments by Mr. Ellis are set out below.
[6] In 1995,
Mr. Ellis and his common-law spouse separated and entered into a mediation
process which resulted in their signing a hand-written agreement.
[7] I have
reproduced below the relevant provisions of the agreement, but I would comment
that the writing is at times difficult to decipher.
Mr. Ellis shall use his best
efforts to provide clothing and other necessaries for the child. It is
acknowledged that there is a special need for the spring and fall.
This agreement is without
prejudice to Ms. Leonard’s right to bring a support application for the child
in a court of competent jurisdiction.
For so long as Mr. Ellis is not
paying monthly child support, he shall accumulate sufficient funds to purchase
and purchase annually a $500 Canada Savings Bond in the name of the child, the
first Bond to be purchased in the fall of 1996. Ms. Leonard shall have custody
of the bond once it is paid for. It is not [unclear] to be used for purposes
other than the child’s post secondary education without the consent of Mr.
Ellis.
[8] The
agreement does not provide for monthly support payments but it contemplates
that they may be made in future. The reason that the agreement was drafted in
this manner is that Mr. Ellis could not afford monthly payments at the time.
[9] Shortly
after the agreement was made, Mr. Ellis’ finances improved. When he became able
to make monthly payments, he did so and in varying amounts which increased over
time as his financial situation continued to improve.
[10] It is not
clear from the evidence when the monthly support payments commenced but nothing
turns on this.
[11] Of more
relevance are the support payments made in 2006. It is not in dispute that
monthly support payments in a total amount of $3,900 were made in 2006.
[12] It is
also not in dispute that the 1995 agreement is the only written agreement
relating to child support.
[13] In order
for Mr. Ellis to succeed in this appeal, the payments made by him in 2006 must
be receivable by his ex-spouse under a written agreement.
[14] This requirement
has been acknowledged in many decisions of this Court, as well as decisions of
the Federal Court of Appeal: Martin v. The Queen, 2005 FCA 297, 2006 DTC
6523; Hodson v. The Queen, 88 DTC 6001 (FCA).
[15] In the
present circumstances, the monthly support amounts that were paid by Mr. Ellis
in 2006 were not provided for in the 1995 written agreement. Mr. Ellis
does not dispute this.
[16] Mr. Ellis
submits that some relief should be given because the written agreement provides
for clothing and other necessaries, as well as a $500 Canada Savings Bond.
[17] Although
I have sympathy for Mr. Ellis’ circumstances in this appeal, I cannot agree
with his submission.
[18] The 1995
written agreement did provide for the provision of necessaries on a best
efforts basis. However, there is not sufficient evidence linking the monthly
payments in 2006 to this requirement. In particular, there was no evidence as
to what portion of the monthly payments was to be used for necessaries. Without
some link between payments that were made and the provision of necessaries,
there is no basis on which I could allow any of the amount claimed.
[19] As for
the requirement to purchase a Canada Savings Bond, Mr. Ellis’ argument is not
exactly clear to me.
[20] Mr. Ellis
testified that he purchased a Bond in 1996. If what is being sought is a
deduction for this expenditure, there is no basis to give a deduction for this
in 2006 because Mr. Ellis testified that he had already claimed a deduction for
this amount in the earlier year. Expenses cannot be deducted more than once.
[21] If Mr.
Ellis’ argument does not relate to the 1996 Bond but instead to the annual obligation
to purchase a Bond, this obligation was not operative in 2006 because it only
applied if Mr. Ellis was not making monthly support payments. Since monthly
payments were made in 2006, there was no requirement to purchase a bond in that
year.
[22] For these
reasons, I do not agree that some deduction should be allowed in respect of the
obligation to purchase a bond.
[23] Unfortunately
for Mr. Ellis, in the 2006 taxation year support payments were made outside the
purview of the written agreement. No deduction is available for these types of
expenses.
[24] Lastly,
Mr. Ellis submits that it is unfair for him to be denied a deduction because
his ex-spouse agreed to include the amount in her income.
[25] Whether
or not Mr. Ellis’ ex-spouse included the $3,900 payment in her income is not a
relevant factor in this appeal. It may seem unfair, but there is no requirement
for the Canada Revenue Agency to treat the recipient and the payer of support
payments on a consistent basis.
[26] For these
reasons, the appeal will be dismissed.
Signed at Ottawa, Canada, this 30th
day of June 2009.
“J. M. Woods”
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