Marsh v. The Queen, docket 2001-1120-IT-I (Informal Procedure)

Date: 20010918

Docket: 2001-1120-IT-I

BETWEEN:

IAN F. MARSH,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasonsfor Judgment

O'Connor, J.T.C.C.

[1]            These appeals were heard at London, Ontario on August 23, 2001 pursuant to the Informal Procedure of this Court.

[2]            The issue is whether the Appellant in the 1997, 1998 and 1999 taxation years was entitled to deduct certain amounts which he paid as child support. The basic facts are as follows:

1.              In the 1997, 1998 and 1999 taxation years, the Appellant sought to deduct payments in the amounts of $2,520.00, $2,548.00 and $1,021.00 respectively as child support payments paid for the Appellant's son, Ian Joseph Marsh ("Ian"), date of birth October 22, 1975.

2.              In accordance with a Divorce Judgment of the Supreme Court of Ontario between the Appellant and Llyn Margaret Marsh (the "Spouse") dated October 25, 1988 the Spouse was given custody of the two children of their marriage, namely Ian and Shana Llyn March, date of birth May 30, 1973, and the Appellant was to pay to the Spouse child support in the amount of $175.00 per child per month.

3.              By Order of the Ontario Court (General Division) Family Court dated July 10, 1996, the Divorce Judgment referred to in paragraph 2. above was varied providing that support monies payable by the Appellant in respect of Ian were to be paid directly to Ian.

4.              In the 1997, 1998 and 1999 taxation years, Ian was 22, 23 and 24 years old respectively. There is some question about the issue of custody. Technically Ian may have been considered as still being in the custody of the Spouse but in fact was principally attending colleges or universities and spent most of his time in various residences close to the college/university he was attending.

5.             Notwithstanding that the Court Order dated July 10, 1996 provided that support monies payable in respect of Ian were to be paid directly to him, in fact they were not. They were remitted to the Director of Support and Custody Enforcement ("Director") and notwithstanding said Order of July 10, 1996 the Director forwarded the payments in question directly to the Spouse by depositing same in the Spouse's bank accounts. Ian made efforts to have the Director pay Ian directly but this never happened.

6.              The support payments in respect of Ian terminated on April 30, 1999 as a result of an agreement executed in May, 1999 between Ian, the Appellant and the Spouse. Thus we are only dealing with the years in question not any period or periods after April 30, 1999.

[3]            The Appellant maintains that he made the payments in question, that there is no doubt they were made pursuant to a court order, and there is no doubt that they were payable on a periodic basis. The Appellant maintains further that since the payments were, notwithstanding the Order of July 10, 1996, made directly to the Spouse she therefore had discretion as their use and they therefore constituted an allowance within the meaning of subsection 56(12) of the Income Tax Act ("Act"). Counsel for the Respondent indicates that the opposite is true and that notwithstanding that the Director sent the payments directly to the Spouse, she did not have discretion as to the use of those monies.

Analysis and Decision

[4]            I find on balance that, since the Director made the payments directly to the Spouse by depositing same into her bank account, she had discretion with respect to those amounts. She may have faced the possibility of some action by Ian if she did not remit the amounts to him but that was only a possibility which did not occur. The payments continued to be made directly into the Spouse's bank account and, in my opinion, in light of that she must be considered to have had discretion as to the use of those amounts. There is no doubt that all the other conditions for allowing deductions were met i.e. court order, periodic, benefiting a child of the marriage, spouses living apart and divorce.

[5]            For the above reasons, these appeals are allowed.

                Signed at Ottawa, Canada, this 18^th day of September, 2001.

"T. O'Connor"

J.T.C.C.

COURT FILE NO.:                                                 2001-1120(IT)I                       

STYLE OF CAUSE:                                               Ian F. Marsh v. Her Majesty the Queen

PLACE OF HEARING:                                         London, Ontario

DATE OF HEARING:                                           August 23, 2001

REASONS FOR JUDGMENT BY:      The Honourable Judge T. O'Connor

DATE OF JUDGMENT:                                       September 18, 2001

APPEARANCES:

For the Appellant:                                                 The Appellant himself

Counsel for the Respondent:              J. Michelle Farrell

COUNSEL OF RECORD:

For the Appellant:                

Name:                               

Firm:                 

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                                Ottawa, Canada

2001-1120(IT)I

BETWEEN:

IAN F. MARSH,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on August 23, 2001 at London, Ontario by

the Honourable Judge Terrence O'Connor

Appearances

For the Appellant:                                The Appellant himself

Counsel for the Respondent:                J. Michelle Farrell

JUDGMENT

          The appeals from the reassessments made under the Income Tax Act for the 1997, 1998 and 1999 taxation years are allowed and the matter is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.

          Signed at Ottawa, Canada, this 18th day of September, 2001.

"T. O'Connor"

J.T.C.C.