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Citation: 2004TCC349
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Date: 20040512
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Docket: 2003-4474(IT)I
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BETWEEN:
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DAVID ZAINA,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Beaubier,
J.
[1] This
appeal pursuant to the Informal Procedure was heard at Lethbridge, Alberta on
April 21, 2004. The Appellant was the only witness.
[2] Paragraphs
5 to 14 of the Reply to the Notice of Appeal set out part of the dispute. They
read:
5. In computing income for
the 1999, 2000, 2001 and 2002 taxation years, the Appellant claimed deductions
for child support as follows:
(a) $10,663.00
for 1999;
(b) $6,184.00
for 2000;
(c) $10,094.00
for 2001; and
(d) $12,644.00
for 2002.
6. The original Notices of
Assessment for the 1999, 2000, 2001 and 2002 taxation years were dated and mailed
to the Appellant as follows:
(a) on December
11, 2000 for 1999;
(b) on April 6,
2001 for 2000;
(c) on April 3,
2002 for 2001; and
(d) on April 3,
2003 for 2002.
7. In reassessing the
Appellant for the 2000 taxation year on April 18, 2002, the Minister of
National Revenue (the "Minister") reduced the claim for child support
by $36.00, from $6,184.00 to $6,148.00. The claim was reduced to allow a
deduction for child support that was paid in the year.
8. In reassessing the
Appellant for the 1999, 2000, 2001 and 2002 taxation years on May 1, 2003, the
Minister disallowed the deduction for child support for each year. The
deduction for child support was disallowed as the Minister considered that the
child support claimed for each year was paid pursuant to a written agreement
made or varied after April 30, 1997.
9. On June 12, 2003, the
Appellant served on the Minister Notices of Objection to the reassessments
dated May 1, 2003 for the 1999, 2000, 2001 and 2002 taxation years.
10. By Notification of
Confirmation dated September 26, 2003, the Minister confirmed the
reassessments dated May 1, 2003 for the 1999, 2000, 2001 and 2002 taxation
years.
11. In so reassessing the
Appellant for the 1999, 2000, 2001 and 2002 taxation years and in so confirming
the reassessments, the Minister made the following assumptions of fact:
(a) the Appellant
and Lisa Marie Zaina (hereinafter the "former spouse") are the
parents of three child of their marriage, being Jordan Paul Zaina, born
November 5, 1987, Taylor Charles Zaina, born September 13, 1989 and Joshua
David Zaina, born September 13, 1989 (hereinafter referred to as the
"children of the marriage");
(b) the Appellant
and the former spouse separated on January 4, 1992;
(c) pursuant to a
Separation Agreement made on May 5, 1992 (the "Separation
Agreement"), the Appellant, among other things, agreed to pay to the
former spouse child support for the children of the marriage in the amount of
$250.00 per month per child, for a total of $750.00 per month, commencing March
1, 1992 and payable on the 1st day of each and every month until such time as
the child in respect of whom support is paid is no longer a child as defined by
the Divorce Act;
(d) pursuant to
the Minutes of Settlement made on December 15, 1997 (the "Minutes of
Settlement"), the Appellant and the former spouse agreed to amend the
Separation Agreement to, among other things, change the amount of child support
that the Appellant was to pay to the former spouse in respect of the children
of the marriage from $750.00 per month to $475.00 per month commencing
September 1, 1997 and continuing on the first day of each month thereafter; and
(e) the
Appellant, through Alberta Justice–Maintenance Enforcement Program, made child
support payments to the former spouse in respect of the children of the
marriage as follows:
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Year
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Child Support
Payments
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1999
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$10,663.00
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2000
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6,148.00
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2001
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10,094.00
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2002
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12,644.00
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B. ISSUES TO BE DECIDED
12. The issues to be decided are:
(a) whether the Appellant is
entitled to deductions for child support as follows:
(i) $10,663.00 for
1999;
(ii) $6,148.00 for 2000;
(iii) $10,094.00 for
2001; and
(iv) $12,644.00 for 2002;
and
(b) whether the Tax Court of Canada
can grant the relief sought with respect to waiving or cancelling the interest.
C. STATUTORY PROVISIONS, GROUNDS
RELIED ON AND RELIEF SOUGHT
13. He relies on subsections 56.1(4), 60.1(4)
and 220(3.1) and paragraph 60(b) of the Income Tax Act, R.S.C. 1985 (5th
Supp.) c.1, (the "Act") as amended for the 1999, 2000, 2001
and 2002 taxation years.
14. He submits that the Separation Agreement
under which the Appellant was required to pay to the former spouse child
support in respect of the children of the marriage was varied after April,
1997, pursuant to the Minutes of Settlement, to change the child support
amounts payable by the Appellant. Accordingly, he submits that he Appellant is
not entitled to a deduction for child support in the amount of $10,094.00 for
2001 and $12,644.00 for 2002 in accordance with subsections 65.1(4) and 60.1(4)
and paragraph 60(b) of the Act.
[3] The
assumptions are correct so far as they go.
[4] The
agreement of May 5, 1992 (subparagraph 11(c)) was embodied in a Court Order in
Ontario which was enforced by the Alberta Maintenance Enforcement Program,
where the Appellant resided and to which he paid the money in question. Due to
layoffs, he was frequently in arrears on his payments, both before and after
April 30, 1997, as is obvious from the amounts claimed and assumed. Some of
these appear to have carried over after the December 15, 1997 settlement.
[5] The
settlement of December 15, 1997 was entered as a Court Order in Ontario (see
Exhibit A-1) then not registered in Alberta. It was registered in the Alberta
Maintenance Enforcement Program on about November 26, 2003.
[6] Until
then, the Appellant, an Alberta resident, was required to pay the money in
question to the Alberta Maintenance Enforcement Program under the previous
Order, which at all material times remained filed in Alberta with the Alberta
Court of Queen's Bench, and did so.
[7] Thus
the Appellant paid the money pursuant to a Court Order which was in force in
his province of residence. But the Respondent will not allow him to deduct
these amounts because of the settlement of December 15, 1997. The Alberta law
is such that the Appellant's former wife did receive the money he paid. The
body of Exhibit A-1 respecting this reads:
Alberta Government of Alberta
JUSTICE 2001 & 2002 IPAC
Gold
Award
for Innovative
Management
______________________________________________________________________________
Maintenance
Enforcement 7th Floor North,
Brownlee Building Telephone (780) 422-5555
P.O.
Box 2404 Outside Edmonton 310-0000 422-5555
Edmonton,
Alberta Fax (780) 401-7565
Canada,
T5J 3Z7
MEP
Account No. 0862-573
November 26, 2003
David Zaina
PO Box 886
Coalhurst AB
T0L 0V0
Dear Mr. Zaina:
RE: MAINTENANCE ENFORCEMENT
Our office has entered your Ontario court order of
December 15, 1997 that reduced your ongoing maintenance from $750.00 per month
effective January 1, 1998. It is also stated in the order that you are to pay
Ms. Lisa Zaina $700.00 in court costs.
We have adjusted your account to reflect these changes
and are in the process of refunding to you the payments that we have been
holding in trust on your account. Despite this, your account is overpaid in the
sum of $18,075.00. Our office will offset this overpayment against future
ongoing maintenance charges of $475.00 per month until the overpayment is
satisfied in February 2007. Enclosed is a statement of your account for your
review.
As a result of your account being overpaid, we have
issued documents to your employer to terminate the garnishee that we have had
in place.
If you have any questions in this matter, inquiries
can be made by telephone at (780) 422-5555 or by writing to the Maintenance
Enforcement Program, Box 2404, Edmonton, Alberta, T5J 3Z7
Yours truly,
Nina Escoto
ISO Unit
Maintenance Enforcement Program
Enclosure
[8] Subsections
1(e) and 16(1) of the Alberta Maintenance Enforcement Act, R.S.A.
2000, read:
1. In this Act
…
(e) "maintenance
order" means an order or interim order of a court in Alberta, a Queen's
Bench protection order under the Protection Against Family Violence Act or an
order, other than a provisional order that has not been confirmed, registered
under the Reciprocal Enforcement of Maintenance Orders Act or the
Interjurisdictional Support Orders Act that has a provision requiring the
payment of maintenance.
16(1) The Director or a creditor
may file with the Court of Queen's Bench a maintenance order that is not
otherwise filed with the Court and, on being filed, the parts of the
maintenance order that relate to maintenance are deemed to be a judgment of the
Court of Queen's Bench.
Its predecessor statutes contained words to the same effect.
[9] In
Fraser v. Canada, 2004 F.C.A. 128, the Federal Court of Appeal stated in
paragraphs 9, 10, 11 and 14:
[9] The relevant part of the statutory
definition of "support amount" in the Income Tax Act asks
whether child support payments have been made under "an order made by a
competent tribunal in accordance with the laws of a province". Parliament
has thus indicated that the question of whether there is an order meeting that
description is a matter of provincial law.
[10] Laws respecting child support are within the
legislative authority of the provinces, as are the laws establishing the
formalities for obtaining court orders for child support. In my view, the
phrase "in accordance with the laws of a province" is broad enough to
refer to all provincial laws regarding the legal obligation to pay child
support, including the provincial laws governing the procedure by which such a
legal obligation is made enforceable. The interpretation proposed by the Crown
would limit those words in a manner that excludes some procedural aspects of
the provincial law relating to child support. I see no justification for such a
narrow interpretation.
[11] This is not a case where a provincial
legislature has attempted to amend the Income Tax Act, or alter its
effect, to meet some provincial objective that does not accord with the
objectives of the Income Tax Act. On the contrary, the Legislature of
Alberta has simply streamlined the procedure for obtaining court orders for
child support so that a "deemed" judgment of the Court of Queen's
Bench, as in this case, is the legal equivalent of an "actual"
judgment made by that Court on consent. In practical terms, the only difference
is that a consent order probably would require the expenditure of more time and
money by the parties, and more judicial resources.
…
[14] The judgment of the Tax Court should be set
aside and replaced with a judgment allowing Mr. Fraser's income tax appeal and
referring the matter back to the Minister for reassessment on the basis that
the child support payments he made in 1999 are deductible. As the parties have
agreed that the Crown will pay Mr. Fraser's reasonable costs of this appeal, no
order should be made as to costs.
[10] That judgment also applies in this case.
[11] Subsection 56.1(4) of the Income Tax Act for the years in
question reads, respecting the words "support amounts":
(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 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
(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.
S. 56.1(4), paragraph (a) of the
definition “support amount” was amended by S.C. 2000, c. 12, Sched. 2, s. 2(b)
and 9(b), applicable January 1, 2001, coming into force on July 31,
2000. S. 56.1(4), paragraph (a) of the definition “support amount” formerly
read:
(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
[12] On the facts of this case there are potentially two
different amounts receivable for the purposes of the definition of “support
amount” in subsection 56.1(4):
- one under an order
of a competent tribunal and registered in Alberta in 1992 under the Alberta
Maintenance Enforcement Act; and
- a different amount under a
subsequent order of an Ontario court (the “Ontario order”) dated December 15,
1997, and not registered in Alberta until well after the relevant period.
The Court must decide which of these two amounts is
the relevant one for the purposes of the definition of “support amount” under
the Income Tax Act. The Alberta court had jurisdiction over the
appellant throughout the relevant period.
[13] The Respondent's position is that the
December 15, 1997 court order from Ontario applies since it comes later in time
and is most recent. The Appellant takes the position that, notwithstanding the
later Ontario court order, the original order registered under the Alberta
Maintenance Enforcement Act should apply since it was both legally
enforceable, and being enforced against him, in Alberta throughout the relevant
period. The Appellant explained that he was continually in arrears and was
confused as to how much he actually owed each month, and was unaware that the
Alberta Justice Maintenance Enforcement Program was enforcing the original
registered order rather than the more recent Ontario order. His ex-wife
continued to accept the amounts payable under the original order and did not draw
the Appellant's attention to the fact that he was paying more to her under the
original order that remained in force against him in Alberta than he was
required to under the subsequent unregistered (in Alberta) Ontario order.
[14] The decision of the Federal Court of Appeal
in Fraser v. Canada makes it clear that for the purposes of subsection
56.1(4) of the Income Tax Act this Court must apply "... the
provincial laws governing the procedure by which such a legal obligation is
made enforceable". (See paragraph 10 of Fraser v. Canada)
[15] In Hill v. Hill [1985] S.J. No. 25,
the defendant husband argued that a maintenance order made against him by a
Manitoba court and registered under the Saskatchewan Reciprocal Enforcement
of Maintenance Orders Act should be nullified in Saskatchewan by a much
later order of a Saskatchewan court nullifying his marriage to the plaintiff.
However, in Hill, Dickson, J. of the Saskatchewan Unified Family Court
stated:
The role of the Saskatchewan courts is
limited to enforcement of the registered order and to applications under s.
8(7) of the Reciprocal Enforcement of Maintenance Orders Act for a provisional
order varying or rescinding it.
(See also Sawers v. Sawers, 22 R.F.L. (2d) 66,
(referred to in Hill v. Hill), wherein the Manitoba Court of Appeal on
similar facts to Hill stated:
The enunciated principle is that the
original order remains in full force and effect until such time an application
is made for its discharge and the request granted;
In other words, the provincial court is limited to
enforcing the registered order or varying it under the Reciprocal
Enforcement of Maintenance Orders Act, but it does not have authority
outside of that Act to otherwise nullify, disregard, or change it. The
same is true under the Alberta Maintenance Enforcement Act. In the
present case, this means that the more recent court order from Ontario is not
effective in Alberta against the appellant unless and until the original
registered order is either varied or rescinded under the Alberta Maintenance
Enforcement Act. As a result, the only obligation that was enforceable in
Alberta during the relevant period was the original order registered under the Alberta
Maintenance Enforcement Act.
[16] The Federal Court of Appeal in Fraser felt
that the Court must apply the provincial law governing the procedure by which
the obligation is enforceable. Thus, the original order registered under the Alberta
Maintenance Enforcement Act applies for the purposes of the definition of
"support amount" in subsection 56.1(4) of the Income Tax Act.
Here, the Alberta Maintenance Enforcement Office enforced the original order
against the Appellant, and the Appellant's ex-spouse continued to receive the
amounts payable under the original order.
[17] For these reasons, the appeal is allowed.
[18] The Appellant represented himself. He is awarded the sum of $100 for
out-of-pocket disbursements such as photocopying and similar expenses incurred
in prosecuting his appeal.
Signed at
Saskatoon, Saskatchewan this 12th day of May, 2004.
Beaubier,
J.
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