Date: 20010130
Docket: 2000-2172-IT
BETWEEN:
WILLIAM CHESNEY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Hamlyn, J.T.C.C.
[1]
This is an appeal from an assessment for the 1998 taxation
year.
[2]
In computing income for the 1998 taxation year, the Appellant
sought to deduct the amount of $1,672.00 as support payments made
("support payments").
[3]
The Minister of National Revenue ("Minister") assessed
the Appellant for the 1998 taxation year, by Notice of Assessment
dated July 26, 1999, deleting the support payments.
FACTS
[4]
In 1998 the Appellant was separated from his then wife. The
Appellant states that in 1998 he paid his wife voluntary spousal
support in the amount of $1,672.00, and that his wife gave him a
receipt (Exhibit A-1) for the support received and claimed it in
income on her 1998 tax return. The Appellant did not make the
support payments under either a court order or a written
agreement. The Appellant states that his former wife would not
have supplied him with a written agreement at that time because
she was interested in furthering her claim for support and other
issues that had to be dealt with in the settlement of the
marriage issues.
[5]
The Appellant also argued that Exhibit A-1, the receipt, could be
interpreted as a written agreement. However, the receipt was
signed only by the Appellant's ex-spouse and did not create a
support obligation.
STATUTORY FRAMEWORK
[6]
The relevant provisions of the Income Tax Act
("Act") are:
56.1(4) "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 ... 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
(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.
60.
There may be deducted in computing a taxpayer's income for a
taxation year such of the following amounts as are
applicable:
...
(b)
(support is determined by a formula).
ANALYSIS
[7]
Support payments for a spouse are deductible by the payer under
paragraph 60(b) of the Act, and must be
included in the income of the recipient under paragraph
56(1)(b).
[8]
For purposes of paragraph 60(b), subsection 56.1(4)
defines "support amount". Part (a) of that
definition requires, inter alia, that a support payment
must have been made under the terms of either an order of a
competent tribunal or a "written agreement". In
McConnell v. The Queen,[1] Judge Sarchuk reaffirmed that for purposes
of paragraph 60(b), an agreement must be in writing. He
stated at page 183:
It is not disputed that for the purposes of subsection
60(b) of the Act an agreement must be in writing.
In Hodson v. The Queen, Heald J. stated:
... I conclude that the words employed by Parliament in
paragraph 60(b) must be interpreted "... in their ordinary
grammatical sense". ... The language used is clear and
unequivocal ... there must be either a Court order or written
agreement which requires such payment.
[9]
Accordingly, unless the support payments claimed by the Appellant
were made under the terms of either an order of a competent
tribunal or a written agreement, such payments would not be
included in the definition of "support amount" under
subsection 56.1(4), and thus not be deductible under
paragraph 60(b).
[10] The
Appellant stated that the negotiation period was a difficult
time; he was trying to do his best and that throughout he was
acting in good faith.
CONCLUSION
[11] The
receipt signed by the Appellant's ex-spouse was not an
agreement signed by both parties and it did not set forth amounts
payable on a periodic basis for the maintenance of the recipient.
The payments were not made under the terms of an order of a
competent tribunal or written agreement. As a consequence the
payments were not "support amounts" within the meaning
of the Income Tax Act. As such, the appeal must be
dismissed.
[12] It is
unfortunate the payments made by the Appellant were not
acknowledged in the divorce judgment filed (Exhibit A-2) in that
pursuant to subsection 60.1(3), support payments made prior to
obtaining a judicial order or entering into a written agreement
are deductible if the order or written agreement specifically so
provides, and the payments are made in the year that the order or
agreement is made or in the previous year. This allows a taxpayer
to make payments that are deductible and still have some time to
negotiate a written agreement or obtain a court order.
DECISION
[13] The
appeal is dismissed.
Signed at Ottawa, Canada, this 30th day of January 2001.
"D. Hamlyn"
J.T.C.C.
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