Nagel v. The Queen, 2003 TCC 769 (Informal Procedure)

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Appeal heard on October 20, 2003, at Calgary, Alberta

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JUDGMENT

The appeal from the assessment of tax made under the Income Tax Act for the 2000 taxation year is dismissed.

Signed at Ottawa, Canada, this 28th day of October, 2003.

Bowie J.

REASONS FOR JUDGMENT

Bowie J.

[1]      This appeal is brought from a reassessment for income tax for the taxation year 2000. The effect of that reassessment was to deny to the Appellant a deduction of $6,000 of the total of $9,120 that he had claimed as support payments made in the year. It is only $6,000 paid for spousal support that is in issue. The appeal was heard under the informal procedure.

[2]      The marriage of the Appellant and his former spouse broke down in early 2000, or before. In all, five interim orders preceded the Divorce Judgment and Consent Corollary Relief Order that was entered in June 2001. The first of these, in June 2000, required the Appellant to pay certain school fees, plus $1,000 per month for child support. No spousal support was ordered. The second and third, both in July 2000, dealt with various matters related to custody of the children and access and division of property, but made no provision for spousal support. The fourth Interim Order was made by the Honourable Madame Justice Kenny of the Court of Queen's Bench of Alberta on July 31, 2000. It made certain provisions relating to division of marital property, and the following with respect to spousal and child support:[1]

4.          The Defendant shall pay to the Plaintiff the sum of $6,000 without prejudice spousal support, payable by August 4, 2000, until J.D.R.

5.          Child support payable by the Defendant to the Plaintiff with respect to the two children of the marriage, namely, ..., and ..., shall remain at $1,000 ... until resolution at the J.D.R.

The final Judgment and Order, following the Judicial Dispute Resolution said this with respect to spousal support:[2]

13.        The Defendant shall pay spousal support to the Plaintiff in the sum of $780 per month, payable on the 1st day of each month, commencing September 1, 2000 and on the first of each subsequent month until August 31, 2001, at which time such support shall terminate.

The Appellant in fact made the payment of $6,000 per month on August 1, 2000, and the payments of $780 per month for September, October, November and December 2000. The Minister accepts that the four payments of $780 are deductible. He disallowed the $6,000 on the basis that in order to be deductible payments of support must meet the definition of "support amount" found in subsection 56.1(4) of the Income Tax Act.

"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, ...

The Appellant may only deduct an amount under section 60(b) if it meets this definition. The Minister disallowed the $6,000 as it was not "... payable or receivable ... on a periodic basis ...".

[3]      The Appellant's position is that the Court of Queen's Bench judge intended that the amount would be deductible because she described it in the Order as "spousal support". That may be so, but deductibility of the amount turns upon the facts and the Income Tax Act provisions, not the intent of the Chambers Judge.

[4]      The present case is not one such as Sanders v. The Queen[3] where the husband was ordered to pay

... a lump sum payment on account of support ... in the amount of $3,500 within two weeks hereof to cover the period October 8, 1996 to December 9, 1996.

and the Court subsequently ordered him to pay $1,750 each month effective December 9, 1996 as interim child and spousal support. There it was obvious that the judge intended the "lump sum" of $3,500 to represent two monthly payments of $1,750, and despite the words "lump sum" they were held to be periodic, and so deductible.

[5]      The Appellant in this case contends that the Court of Queen's Bench judge stated, in effect, that the $6,000 amount was in lieu of costs, and that she was "doing [him] a favour" by describing it as spousal support.

[6]      Both the Appellant and his ex-spouse gave evidence as to what was said in Court, with a view to characterizing the payment. I do not consider such evidence to be useful. The terms of the Order have to be considered in accordance with the words used in it. If written reasons accompany the Order they may be looked to for aid in interpretation, but oral evidence as to what was said by a judge or anyone else may not. In any event, accepting that the $6,000 is spousal support, it clearly is not payable on a periodic basis. There is no order for periodic spousal support to which it can be related in order to characterize it as a single payment combining a number of periodic payments. There was no earlier Order for spousal support, and the later Order for $780 per month commencing September 1, 2000 in no way relates to the $6,000.

[7]      I have considered the eight criteria in McKimmon v. M.N.R.,[4] and the circumstances surrounding the Order of July 31, 2000. There is nothing in the evidence to suggest that the payment was intended by the judge to be anything other than what it is, a lump sum payment. Lump sum payments, as opposed to periodic payments, are not deductible.

[8]      The appeal is dismissed.

Signed at Ottawa, Canada, this 28th day of October, 2003.

Bowie J.