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Citation: 2003TCC379
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Date: 20030530
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Docket: 2000-2091(IT)G
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BETWEEN:
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SUSAN CARMICHAEL,
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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
Mogan J.
[1] The Appellant and Trevor Johnson
("Trevor") were married on June 24, 1978 in the
Province of Ontario. There were two children of the marriage:
Stephanie (January 1984) and Derek (April 1987). In February
1995, the Appellant and Trevor separated, and they have since
lived separate and apart at all relevant times. On May 2, 1995,
Justice Hermiston of the Ontario Court (General Division) issued
an Order (Exhibit A-1, Tab 1) upon a motion in which the
Appellant was the "Petitioner" and Trevor was the
"Respondent". The Order stated in part:
5. THIS COURT
ORDERS THAT on an interim interim basis the Respondent husband
shall pay to the Petitioner wife the sum of $1,400.00 per month
per child commencing May 1, 1995 for a total support payment in
the amount of $2,800.00 per month.
6. THIS COURT
ORDERS THAT the Respondent husband is to pay on an interim
interim basis all house expenses including the mortgage,
insurance, utilities, cable, telephone, taxes and maintenance as
an incident of spousal support, otherwise, this issue is
adjourned pending cross-examination.
[2] Trevor made the child support
payments under paragraph 5 of the Order and paid various house
expenses under paragraph 6 of the Order. The issue in this appeal
is whether the Appellant is required to include in computing her
income for 1995 and 1996 the amounts paid by Trevor under
paragraph 6 of the Order.
[3] When filing her income tax returns
for 1995 and 1996, the Appellant reported as "alimony or
maintenance income" the amounts of $21,000 and $34,000,
respectively. See Exhibit R-1, Tabs 1 and 2. These amounts were
received as child support under paragraph 5 of the Order (Exhibit
A-1, Tab 1). When filing his income tax returns for 1995 and
1996, Trevor deducted as "alimony or maintenance paid"
the amounts $29,605.82 and $45,555.70, respectively. See Exhibit
R-1, Tabs 3 and 4. The differences between the amounts reported
by the Appellant and the amounts deducted by Trevor are as
follows:
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1995
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1996
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Trevor deducted
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$29,605.82
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$45,555.70
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Appellant reported
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21,000.00
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34,000.00
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Difference
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$8,605.82
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$11,555.70
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The amounts shown as "Difference" in the above table
are the house expenses paid by Trevor under paragraph 6 of the
Order. By Notices of Reassessment dated March 19, 1998, the
Minister of National Revenue added to the Appellant's
reported income for 1995 and 1996 the amounts $8,605.82 and
$11,555.70, respectively. The Appellant has appealed from those
reassessments.
[4] At the commencement of the
hearing, counsel for the Appellant and counsel for the Respondent
filed with the Court two documents entitled "Revised
Statement of Agreed Facts" and "Statement of Additional
Agreed Facts". I will set out the content of those two
documents.
Revised Statement of Agreed Facts
1. Amounts
were paid by the Appellant's former spouse to third parties
for house expenses, including the mortgage, insurance, utilities,
cable, telephone, taxes and maintenance ("Amounts") as
an incident of spousal support, pursuant to an Order of Mr.
Justice Hermiston of the Ontario Court, General Division dated
May 2, 1995 ("Order").
2. The Amounts
paid total $8,605.82 in 1995 and $11,555.70 in 1996.
3. The Order
does not provide that subsection 56.1(2) and
subsection 60.1(2) was to apply to the Amounts.
4. The
Appellant was living, in 1995 and 1996, separate and apart from
her spouse who was required to make the payments at the time the
payments were made and throughout the remainder of the year.
5. The
Minister of National Revenue (the "Minister")
reassessed the Appellant for 1995 and 1996 to add the amounts of
$8,605.82 and $11,555.70 to the Appellant's 1995 and 1996
taxation years, respectively, by Notices of Reassessment dated
March 19, 1998 and by Notice of Confirmation dated February 15,
2000.
Statement of Additional Agreed Facts
The following additional agreed facts are in addition to (and
does not replace) the "Revised Statement of Agreed
Facts" executed on August 20, 2002 by the Appellant and on
August 21, 2002 by the Respondent.
1. All
payments ordered pursuant to paragraph 6 of the Order of
Justice Hermiston of the Ontario Court, General Division
dated May 2, 1995 ("Order") are payments for the
benefit of the Appellant within the meaning of paragraph
56.1(1)(b).
2. The
Appellant acknowledges having received payments from her former
spouse in respect of Bell Canada charges of $120.00 in 1995 and
$553.76 in 1996.
[5] The provisions of the Income
Tax Act referred to in the Revised Statement of Agreed Facts
and Statement of Additional Agreed Facts plus other relevant
provisions as they applied in 1995 and 1996 are set out below.
For brevity and comprehension, I am omitting certain words which,
in my view, are not relevant to the appeal herein. It is worth
noting that paragraphs 56(1)(b) and (c) are
parallel in structure to paragraphs 60(b) and
(c).
56(1) Without restricting the generality of
section 3, there shall be included in computing the income of a
taxpayer for a taxation year,
(a) ...
(b) an amount
received by the taxpayer in the year as alimony or other
allowance payable on a periodic basis for the maintenance of the
taxpayer, children of the taxpayer or both the taxpayer and the
children if the taxpayer, because of the breakdown of the
taxpayer's marriage, was living separate and apart from the
spouse or former spouse who was required to make the payment at
the time the payment was received and throughout the remainder of
the year and the amount was received under a decree, order or
judgment of a competent tribunal or under a written
agreement;
(c) an amount
received by the taxpayer in the year as an allowance payable on a
periodic basis for the maintenance of the taxpayer, children of
the taxpayer or both the taxpayer and the children if
(i) at the
time the amount was received and throughout the remainder of the
year the taxpayer was living separate and apart from the person
who was required to make the payment,
(ii) the person who
was required to make the payment is the natural parent of a child
of the taxpayer, and
(iii) the amount was
received under an order made by a competent tribunal in
accordance with the laws of a province;
60 There may be
deducted in computing a taxpayer's income for a taxation year
such of the following amounts as are applicable:
(a)
...
(b) an amount
paid by the taxpayer in the year as alimony or other allowance
payable on a periodic basis for the maintenance of the recipient,
children of the recipient or both the recipient and the children,
if the taxpayer, because of the breakdown of the taxpayer's
marriage, was living separate and apart from the spouse or former
spouse to whom the taxpayer was required to make the payment at
the time the payment was made and throughout the remainder of the
year and the amount was paid under a decree, order or judgment of
a competent tribunal or under a written agreement;
(c) an amount
paid by the taxpayer in the year as an allowance payable on a
periodic basis for the maintenance of the recipient, children of
the recipient or both the recipient and the children, if
(i) at the
time the amount was paid and throughout the remainder of the year
the taxpayer was living separate and apart from the
recipient,
(ii) the taxpayer is
the natural parent of a child of the recipient, and
(iii) the amount was
received under an order made by a competent tribunal in
accordance with the laws of a province;
56(12) Subject to subsections 56.1(2) and
60.1(2), for the purposes of paragraphs (1)(b), (c)
and (c.1) (in this subsection referred to as the "former
paragraphs") and 60(b), (c) and (c.1) (in
this subsection referred to as the "latter paragraphs"),
"allowance" does not include any amount that is received by a
person, referred to in the former paragraphs as "the taxpayer"
and in the latter paragraphs as "the recipient", unless that
person has discretion as to the use of the amount.
56.1(1) Where a decree, order, judgment or
written agreement described in paragraph 56(1)(b) or
(c), or any variation thereof, provides for the periodic
payment of an amount
(a) to a taxpayer by a person who is
(i) the
taxpayer's spouse or former spouse, or
(ii) where the
amount is paid under an order made by a competent tribunal in
accordance with the laws of a province, an individual of the
opposite sex who is the natural parent of a child of the
taxpayer, or
(b) for the
benefit of the taxpayer, children in the custody of the taxpayer
or both the taxpayer and those children,
the amount or any part thereof, when paid, shall be deemed for
the purposes of paragraphs 56(1)(b) and (c) to have
been paid to and received by the taxpayer.
56.1(2) For the purposes of paragraphs
56(1)(b) and (c), the amount determined by the
formula
A - B
where
A is the total
of all amounts each of which is an amount ... paid by a
person in a taxation year, under a decree, order or judgment of a
competent tribunal or under a written agreement, in respect of an
expense ... incurred in the year ... for the
maintenance of a taxpayer who is
(a) that
person's spouse or former spouse, or
(b) where the
amount is paid under an order made by a competent tribunal in
accordance with the laws of a province, an individual of the
opposite sex who is the natural parent of a child of the
person,
or for the maintenance of children in the taxpayer's
custody or both the taxpayer and those children if, at the time
the expense was incurred and throughout the remainder of the
year, the taxpayer was living separate and apart from that
person, and
B is the
amount ...
shall, where the decree, order, judgment or written agreement,
as the case may be, provides that this subsection and
subsection 60.1(2) shall apply to any payment made
thereunder, be deemed to be an amount paid by that person and
received by the taxpayer as an allowance payable on a periodic
basis.
60.1(1) Where a decree, order, judgment or
written agreement described in paragraph 60(b) or
(c), or any variation thereof, provides for the periodic
payment of an amount by a taxpayer
(a) to a
person who is
(i) the
taxpayer's spouse or former spouse, or
(ii) where the
amount is paid under an order made by a competent tribunal in
accordance with the laws of a province, an individual of the
opposite sex who is the natural parent of a child of the
taxpayer, or
(b) for the
benefit of the person, children in the custody of the person or
both the person and those children,
the amount or any part thereof, when paid, shall be deemed for
the purpose of paragraphs 60(b) and (c) to have
been paid to and received by that person.
60.1(2) For the purposes of paragraphs 60(b) and
(c), the amount determined by the formula
A - B
where
A is the total
of all amounts each of which is an amount ... paid by a
taxpayer in a taxation year, under a decree, order or judgment of
a competent tribunal or under a written agreement, in respect of
an expense ... incurred in the year ... for
maintenance of a person who is
(a) the
taxpayer's spouse or former spouse, or
(b)
where the amount is paid under an order made by a competent
tribunal in accordance with the laws of a province, an individual
of the opposite sex who is the natural parent of a child of the
taxpayer,
or for the maintenance of children in the person's custody
or both the person and those children if, at the time the expense
was incurred and throughout the remainder of the year, the
taxpayer was living separate and apart from that person, and
B is the
amount ...
shall, where the decree, order, judgment or written agreement,
as the case may be, provides that this subsection and
subsection 56.1(2) shall apply to any payment made
thereunder, be deemed to be an amount paid by the taxpayer and
received by that person as an allowance payable on a periodic
basis.
[6] The "Order" referred to
in paragraphs 1 and 3 of the Revised Statement of Agreed Facts is
the Order of Justice Hermiston (Exhibit A-1, Tab 1) which is
quoted in part in paragraph 1 above. The parties have agreed that
the Order does not provide that subsections 56.1(2) and 60.1(2)
apply to amounts paid by Trevor to third parties under paragraph
6 of the Order. Even if the parties had not so agreed, it is
apparent that the terms of the Order make no specific reference
to subsections 56.1(2) and 60.1(2) and, indeed, make no specific
reference to any income tax consequences resulting from any
payments made by Trevor to the Appellant or to a third party. The
Order is silent with respect to all income tax matters.
[7] There are recent cases in this
Court and in the Federal Court of Appeal reviewing court orders
and separation agreements which do, or do not, refer to
subsections 56.1(2) and 60.1(2). An important condition in each
of those two subsections is found in the operative words
integrated with the "deeming" provision:
... where the decree, order, judgment or written
agreement, as the case may be, provides that this subsection and
... shall apply to any payment made thereunder ...
[8] In The Queen v. Arsenault,
96 DTC 6131, the Federal Court of Appeal was divided on the
question of whether the amounts in certain cheques, issued by a
man and delivered to his wife (after they had separated) but
payable to the wife's landlord, were deductible under
paragraph 60(b) in computing the man's income. The
majority held (in February 1996) that the amounts were
deductible. In The Queen v. Armstrong, 96 DTC 6315,
the Federal Court of Appeal considered a similar situation in
which a man was attempting to deduct payments made for the
benefit of his former wife. Stone J.A. writing for the Court
stated at page 6319:
The view that subsection 60.1(2) applies can be dealt with
shortly. In my view, the deeming provision employed by Parliament
at the end of this subsection applies only "where the
decree, order, judgment or written agreement ... provides that
this subsection and section 56.1(2) shall apply to any payment
made pursuant thereto". No such statutory language appears
in either of the court orders. It follows, therefore, that
subsection 60.1(2) can have no application in allowing the
amounts to be deducted from the respondent's income.
The judgment in Armstrong, against the taxpayer, was
delivered just three months after the judgment in
Arsenault. In my view, the decision in Armstrong
was based on subsection 60.1(2) whereas the decision in
Arsenault was based on paragraph 60(b).
[9] In The Queen v. Larsson, 97
DTC 5425, the Federal Court of Appeal again considered a similar
situation when McDonald J.A. stated:
... The case law has established that, generally
speaking, where a recipient spouse does not have discretion as to
the use of the support payments, those payments will not be
considered to be an allowance: Queen v. Armstrong,
96 DTC 6315 (F.C.A.). Thus, directed support payments such
as those made in this case will generally not be subject to the
tax treatment outlined above, and will be taxed in the hands of
the paying spouse.
One exception to this general principle was found where a
spouse makes directed support payments pursuant to an agreement
or court order. In this situation, the Income Tax Act
specified that such payments shall be deemed to be an allowance
for purposes of the Act where the agreement or court order
specifically mentions subsections 60.1(2) and 56.1(2) of the
Income Tax Act. If those sections are mentioned, the
amount is deemed to be an allowance and is deductible by the
payor spouse.
...
Subsection 60.1(2) goes on to allow for deductibility of
certain amounts where the court order or support agreement makes
specific mention of subsections 56.1(2) and 60.1(2). The one
clear thread from all of this seems to be that to ensure
deductibility of support payments, the order or agreement should
mention subsections 56.1(2) and 60.1(2).
In Larsson, there were four court orders but only the
fourth referred specifically to subsections 56.1(2) and 60.1(2).
The Federal Court of Appeal concluded that the fourth court order
was retroactive and so the amounts were deductible. The decision
in Larsson, standing alone, is far-reaching because the
Federal Court of Appeal stated that the court order or written
agreement must specifically "mention" subsections
56.1(2) and 60.1(2). Subsequent cases have softened that
result.
[10] In Pelchat v. The Queen, [1998]
1 C.T.C. 2741, the taxpayer and his former wife were divorced in
1989. The judge of the Quebec Superior Court who granted the
divorce officially recognized a prior agreement whereby the
taxpayer undertook to reimburse his former wife for certain
household expenses like mortgage, property tax, insurance,
heating and electricity. The divorce judgment contained a
provision which stated:
As support, the petitioner shall pay the expenses set out
below calculated on a monthly basis ... The said support
shall be taxable in the hands of the respondent and tax
deductible for the petitioner.
The Minister disallowed the deduction of the reimbursement
amounts because the divorce judgment did not expressly provide
that subsections 60.1(2) and 56.1(2) were to apply. Judge
Archambault of this Court allowed the taxpayer (husband) appeal
because the divorce judgment indicated that the parties clearly
recognized that the amounts paid would be taxable in the hands of
the wife and deductible in the hands of the husband.
[11] In Ferron v. The Queen, [2001] 3
C.T.C. 2072, Judge Archambault was again faced with circumstances
similar to those in Pelchat. The support agreement between
Daniel Ferron and his wife (Ms. Bernard) after they had separated
did not mention subsections 56.1(2) and 60.1(2) but it was even
more specific than Pelchat with respect to the tax
consequences of amounts paid by Mr. Ferron to third parties.
Paragraph 2.7 of the support agreement stated:
2.7 The payments made
under paragraphs 2.1 to 2.6 above shall be taxable as income in
Ms. Bernard's hands and may be deducted as support by Mr.
Ferron.
Judge Archambault distinguished the more recent decision of
the Federal Court of Appeal in Larsson and, following his
prior decision in Pelchat, allowed the taxpayer
(husband) appeal.
[12] In a more recent decision of the
Federal Court of Appeal, Veilleux v. The Queen
[2002] F.C.J. 737, Mr. Veilleux and his wife had divorced in
December 1989. An agreement on corollary relief filed in the
divorce proceeding was silent on the tax treatment of amounts
paid by Mr. Veilleux to third parties for the benefit of his
former wife. In March 1990, three months after the divorce, Mr.
Veilleux and his former wife signed a supplementary agreement to
provide for the tax treatment of amounts he paid to third parties
but the agreement did not specifically mention subsections
56.1(2) and 60.1(2). The supplementary agreement did, however,
contain the following paragraphs:
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[TRANSLATION] All amounts that Gaston Veilleux agrees to
pay to Louise Ouellette are net of tax; accordingly,
Gaston Veilleux agrees to pay any federal and provincial
taxes that may be owed by Louise Ouellette arising from the
payment of the said maintenance.
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All amounts paid to Louise Ouellette or to third parties
on her behalf shall be deemed to be part of the support;
those amounts shall include the expenses relating to the
family residence (i.e. mortgage payments, municipal and
school taxes, home insurance, electricity, heating,
maintenance and cable), expenses relating to the various
family insurance plans (i.e. life insurance for dependants,
survivor pension, hospitalization, medical expenses,
paramedical expenses, dental insurance), provincial and
federal income tax and any other amount that may be agreed
on by the two parties (automobile repairs, children's
activity fees, etc.).
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[13] The Federal Court of Appeal concluded
that the two paragraphs quoted above showed that Mr. Veilleux and
his former wife had agreed that she would include in her income
any amounts he paid to third parties for her benefit; and that he
would indemnify her with respect to any tax she might pay on such
amounts. Létourneau J.A., writing for the Court, stated
that he preferred the approach taken by Judge Archambault in
Pelchat and Ferron; and he continued in paragraph
24:
24 ... an
express reference to the numbers of subsections 56.1(2) and
60.1(2) is not required in the written agreement; it need only be
apparent from the written agreement that the parties have
understood the tax consequences of that agreement. A mere
reference to the numbers of the subsections in the agreement is
no better guarantee that the parties to the agreement understood
their duties and their rights. On that point, stating and
describing those duties and rights in the written agreement
seems, in my view, to achieve Parliament's objective just as
well as, if not better than, a mere magical reference to numbers
of sections the substance of which is not stated in the
agreement.
[14] The practical, common sense approach of
the Federal Court of Appeal in Veilleux is attractive.
There is a limitation, however, in the application of
Veilleux because the support agreement or court order, if
it does not contain a specific reference to subsections 56.1(2)
and 60.1(2), must demonstrate from its terms that the parties
understand the tax consequences of one party making certain
payments. In other words, it must be apparent from the terms of
the document that both parties understand that one party paying a
particular amount will deduct that amount in computing income,
and the other party will include that same amount in computing
income. That, after all, is the practical effect of the
"deeming" provision in subsections 56.1(2) and 60.1(2):
"be deemed to be an amount paid ... and received
... as an allowance payable on a periodic basis".
[15] As stated in paragraph 6 above, the
Order of Justice Hermiston (Exhibit A-1, Tab 1) is
silent with respect to all income tax matters. Therefore, the
Respondent may not draw any comfort from the fact that the
Federal Court of Appeal appears to have moved from a strict rule
in Larsson to a more flexible rule in Veilleux. I
am satisfied that subsections 56.1(2) and 60.1(2) do not apply to
payments made by Trevor under paragraph 6 of the Order of
Justice Hermiston (Exhibit A-1, Tab 1) but paragraph
56(1)(b), standing alone, may apply to those payments.
[16] In paragraph 1 of the Statement of
Additional Agreed Facts, the Appellant and Respondent have agreed
that all payments made by Trevor pursuant to paragraph 6 of the
Order of Justice Hermiston (Exhibit A-1, Tab 1) were payments for
the benefit of the Appellant within the meaning of
paragraph 56.1(1)(b) of the Act. Therefore,
under subsection 56.1(1) such payments made by Trevor to third
parties are deemed for the purpose of paragraph 56(1)(b)
to have been paid to and received by the Appellant.
[17] In Hak v. The Queen, 99 DTC 36,
the taxpayer and his wife had separated on January 2, 1995. On
that date, they signed what appeared to be a "homemade"
separation agreement which contained the following clause:
5. That Anwar
Hak will provide $1000 per month for alimony and support, or
Pay apartment rent
of
$455.00/month
Utility bills of
approximately
$200.00/month
Health care premium
approximately
$100.00/month
Total
$750.00/month [sic]
and the remainder of $245/month for miscellaneous expenses for
a total of $1,000 per month.
At trial, Mr. Hak proved by receipts from third parties that
he had paid $8,151.24 under clause 5 during 1995 which was the
only year under appeal. The Minister of National Revenue
disallowed the deduction of any amounts paid by Mr. Hak to third
parties under clause 5. When allowing the appeal by Mr. Hak,
Bowman J. (as he then was) stated in paragraph 12:
... the spouses agreed to an arrangement whereby a
portion of the $1,000 per month would be paid directly to the gas
and utility companies and the balance would be paid to her. This
method of payment was specifically set out in the agreement as an
alternative to paying her directly the $1,000 per month. Although
the agreement does not use the words "on behalf of Fazima Hak" or
"for the benefit of Fazima Hak", this is plainly the intent and
effect of the agreement and, in particular, paragraph 5
thereof. Without more, I should have thought it obvious that the
appellant's making the payments on Fazima Hak's behalf
and for her benefit would constitute constructive receipt by her
and would be a payment by Mr. Hak of the type contemplated by
paragraph 60(b).
[18] After setting out all of subsection
60.1(1), Bowman J. continued:
[14] It is not clear what
paragraph 60.1(1)(b) added to what was already
provided by the law of constructive receipt. It will be noted
that the focus of subsection 60.1(1) is on the recipient,
not the payor. It is the recipient who is deemed to have been
paid and to have received the amount. It is possible that
subsection 60.1(1) was inserted into the Act to
ensure that the recipient could not avoid taxation on amounts
paid to third parties on his or her behalf, on the basis that he
or she did not "receive" them. It is interesting to note that
paragraph 60(b) requires that the amount be paid as
alimony or maintenance. It does not, in so many words, say to
whom they have to be paid.
[17] It appears quite obvious
that Fazima Hak had a discretion with respect to the entire
$1,000, and she exercised that discretion by constituting her
husband her agent to pay on her behalf certain expenses such as
utility bills and rent. What Fazima Hak is saying in effect is
"You are to pay me $1,000 per month. You can satisfy part of that
obligation by paying some of my bills."
[31] I do not think that
subsection 60.1(2) has any application. The payment of the
rent and utility expenses was simply an alternative means, agreed
to by the spouses, of satisfying a portion of the appellant's
obligation to pay his spouse the periodic allowance of $1,000 per
month. The failure to mention in the agreement that a provision
that has no application in any event should apply to the payments
cannot be fatal to deductibility under
paragraph 60(b).
[37] ... Here we have
payments that in my view, are covered by
paragraph 60(b) and an agreement between the spouses
that does no more than permit the appellant to fulfil in part his
obligation to pay the periodic amount of $1,000 by paying certain
bills that the wife would otherwise have to pay out of the $1,000
monthly allowance. In my view, this case is much more
specifically covered by Arsenault. I cannot assume, in the
absence of a clear indication to the contrary, that the Federal
Court of Appeal in Armstrong intended to overrule its own
decision of three months earlier in Arsenault. Indeed,
this case is stronger than Arsenault. In Arsenault,
the husband unilaterally presented his wife with cheques payable
to third parties. In this case, the payments were made with the
wife's express consent.
[19] This case really turns on the words of
paragraph 6 of Justice Hermiston's Order. Although it is set
out in paragraph 1 above, it is worth repeating here:
6. THIS COURT
ORDERS THAT the Respondent husband is to pay on an interim
interim basis all house expenses including the mortgage,
insurance, utilities, cable, telephone, taxes and maintenance as
an incident of spousal support, otherwise, this issue is
adjourned pending cross-examination.
I will make two observations. First, the husband is to pay
"all house expenses" which, by nature, tend to be
periodic. Most of the expenses listed (mortgage, utilities, cable
and telephone) are payable monthly or in alternate months. Other
expenses like insurance, taxes and maintenance are payable more
frequently than once a year. And second, the husband is required
to pay all house expenses "as an incident of spousal
support". Therefore, the payments by Trevor under paragraph
6 are both periodic and specifically for the support of the
Appellant. As stated in paragraph 16 above, under subsection
56.1(1)(b), payments made by Trevor to third parties are
deemed to have been paid to and received by the Appellant for the
purpose of paragraph 56(1)(b).
[20] When the appeal of Arsenault
(referred to in paragraph 8 above) was heard in this Court [1995]
2 C.T.C. 2168, Judge Brulé held that the wife had
constructive receipt of the amounts in dispute; she had
acquiesced in her former husband paying those amounts to her
landlord; and she had effectively constituted the landlord as her
agent for the purpose of receipt. Judge Brulé considered
only paragraph 60(b) in allowing the deduction; and he was
affirmed in the Federal Court of Appeal as described in paragraph
8 above. In my view, the decision of the Federal Court of Appeal
in Arsenault was about paragraph 60(b) and not
about subsection 60.1(2).
[21] Paragraph 56(1)(b) is parallel
in structure to paragraph 60(b) and describes amounts received as
alimony or other allowance payable on a periodic basis for
maintenance. Those words describe the amounts which Trevor was
required to pay to third parties under paragraph 6 of the Order
and which, under subsection 56.1(1), the Appellant is deemed
to have received. I will paraphrase Bowman J. from Hak
(paragraph 17) by stating that the Appellant had a discretion
with respect to the house expenses referred to in paragraph 6 of
the Order; and she exercised that discretion by constituting her
husband her agent to pay on her behalf all house expenses.
[22] The Appellant is required to include in
the computation of her income for 1995 and 1996 the amounts of
$8,605.82 and $11,555.70, respectively, as shown in paragraph 3
above. The appeals for 1995 and 1996 are dismissed, with
costs.
Signed at Ottawa, Canada, this 30th day of May, 2003.
J.T.C.C.
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