Date: 20001220
Docket: 2000-3281-IT-I
BETWEEN:
MICHAEL BROMLEY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Bell, J.T.C.C.
ISSUE:
[1]
The issue is whether certain amounts paid by the Appellant
pursuant to a written separation agreement, in the 1995, 1996 and
1998 taxation years, are deductible by him. Although a notice of
appeal respecting his 1992 taxation year was filed, the Appellant
abandoned same at the hearing.
FACTS:
[2]
The Appellant had a common law conjugal relationship with one
Catherine Suzanne Custeau ("Custeau"), which terminated
on September 18, 1988 when they commenced living separate and
apart. Under a written separation agreement made in 1992 the
Appellant agreed to pay Custeau the sum of $1,000 per month for
the support of their two children.
[3]
The Appellant made the following payments pursuant to the
agreement:
1995
$ 2,000
1996
$17,000
1998
$ 6,000
SUBMISSIONS:
[4]
Appellant's counsel submitted that the Appellant was entitled
by virtue of section 60(b) to deduct the 1995 and 1996
payments.[1] That
section provides that there may be deducted in computing a
taxpayer's income for a taxation year such of the following
amounts are applicable.
First version of 60(b):
(b) an amount paid by the taxpayer in the year,
pursuant to a decree, order or judgment of a competent tribunal
or pursuant to a written agreement, as alimony or other allowance
payable on a periodic basis for the maintenance of the recipient
thereof, children of the marriage, or both the recipient and
children of the marriage, if he was living apart from, and was
separated pursuant to a divorce, judicial separation or written
separation agreement from, his spouse or former spouse to whom he
was required to make the payment at the time the payment was made
and throughout the remainder of the year;
Second version of 60(b):
The second version was included in section 20.(1) of the
Income Tax Amendments Revision - Schedule VIII ("Amendments
Revision") which reads as follows:
20.(1) Paragraphs 60(b) and (c) of the Act are replaced by
the following:
(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;
Subsection (20).11 of the Amendments Revision provides that:
20.(11) Subsection (1) applies to amounts
received[2]under a decree, order or judgment of a competent
tribunal or under a written agreement, with respect to a
breakdown of a marriage occurring after 1992.
Common Law Spouse Amendment:
Subsection 140(3) of the Amendments Revision provides that:
(3)
Section 252 of the Act is amended by adding the following after
subsection (3):
(4)
In this Act,
(a)
words referring to a spouse at any time of a taxpayer include the
person of the opposite sex who cohabits at that time with the
taxpayer in a conjugal relationship and
(i)
has so cohabited with the taxpayer throughout a 12-month period
ending before that time, or
(ii)
is a parent of a child of whom the taxpayer is a parent
and, for the purposes of this paragraph, where at any time the
taxpayer and the person cohabit in a conjugal relationship, they
shall, at any particular time after that time, be deemed to be
cohabiting in a conjugal relationship unless they were not
cohabiting at the particular time for a period of at least 90
days that includes the particular time because of a breakdown of
their conjugal relationship;
(b)
references to marriage shall be read as if a conjugal
relationship between 2 individuals who are, because of paragraph
(a), spouses of each other were a marriage;
(c)
provisions that apply to a person who is married apply to a
person who is, because of paragraph (a), a spouse of a
taxpayer; and
(d)
provisions that apply to a person who is unmarried to not apply
to a person who is, because of paragraph (a), a spouse of
a taxpayer.
Subsection 140(4) of the Amendments Revisions provides that:
Subsections (1) and (3) apply after 1992.
Third version of 60(b)
The third version of section 60(b) reads as follows:
(b) support - the total of all amounts each of which is an
amount determined by the formula
A - (B+C)
where
A
is the total of all amounts each of which is a support amount
paid after 1996 and before the end of the year by the taxpayer to
a particular person, where the taxpayer and the particular person
were living separate and apart at the time the amount was
paid,
B
is the total of all amounts each of which is a child support
amount that became payable by the taxpayer to the particular
person under an agreement or order on or after its commencement
day and before the end of the year in respect of a period that
began after its commencement day, and
C
is the total of all amounts each of which is a support amount
paid by the taxpayer to the particular person after 1996 and
deductible in computing the taxpayer's income for a preceding
taxation year;
This new provision was expressed to be
... effective for amounts received after 1996, ...[3]
ANALYSIS AND CONCLUSION:
[5]
Respecting the 1995 and 1996 taxation years, Appellant's
counsel acknowledged that the Appellant was not entitled to a
deduction under the second version of section 60(b)
because it applies only to marriage breakdowns occurring after
1992. However, he submitted that the Appellant was entitled to a
deduction for those years under the former section 60(b),
presumably on the basis that it was replaced only so far as
marriage breakdown after 1992 was concerned. He argued that the
new subsection 252(4) used the words "at any time" and
"at that time" and that they, therefore, referred to a
time when an unmarried couple was cohabiting, even if before
1993, thus entitling the Appellant to a deduction.
[6]
Counsel then submitted that the Appellant was entitled to a
deduction for his 1998 taxation year on the basis that, as above,
new subsection 252(4) would apply to make Custeau a "former
spouse"[4]. He
pointed out that the formula in the third version of paragraph
60(b) would entitle his client to a deduction of $6,000 in
1998 because the amount of A in that formula was the $6,000
payment and the amount of each of B and C was nil.
[7] I
do not accept those submissions. Subsection 252(4) applies only
to taxation years after 1992. The amendment introducing that
subsection cannot, therefore, be said to characterize a
relationship as a common law relationship in which each of the
Appellant and Custeau could be regarded as a spouse or former
spouse, that relationship having existed prior to, and having
ended in, 1988.
[8]
Had the couple been married and then divorced in 1988,
Custeau would clearly be a "former spouse" and I would
be obliged to decide whether the second version of paragraph
60(b) applied only to persons whose marriage breakdown
occurred after 1992, leaving the first version of paragraph
60(b) remaining in force, thus entitling the Appellant to
a deduction. Support for this interpretation is found in the fact
that the amended paragraph 60(b) was implemented by
subsection 1 of section 20 of the Amendments Revisions and the
application thereof was accomplished by subsection 11 of the same
section. Obviously, the recipient of such amount would support
the opposite interpretation. The implementing provisions that
apply to each of paragraph 56(1)(b) (including in the
recipient's income the amount deducted by the payor, under
paragraph 60(b)) and paragraph 60(b) are identical. The recipient
would submit that, respecting the 1995 and 1996 taxation years,
the second version of section 60(b) replaced the
first version of that section, such version having no validity
after replacement. The word "replace" is
defined, in part, in The New Shorter Oxford English
Dictionary as follows:
Take the place of, become a substitute for ...
[9]
My finding respecting subsection 252(4) obviates the necessity of
my interpreting the extent and application of the second version
of paragraph 60(b).
[10]
Appellant's counsel referred to John Carey v. Canada,
1999 DTC 3502. The facts in Carey were very similar to the facts
in the present case. The Court decided that Carey should succeed.
It appears that the learned judge concluded that the first
version of paragraph 60(b) should be given the
interpretation urged by Appellant's counsel in this case. My
study of the Reasons for Judgment does not inform me as to what
submissions were made. As set out above, it was not necessary for
me to make a decision in that regard. While respecting his
judgment, my view of the application of subsection 252(4) differs
from the view expressed by that learned judge. I have concluded
that it does not apply retroactively to any year preceding 1993.
Lack of precision in the legislation in this regard is extremely
unfortunate because faulty legislation, not clearly presenting
the intent of Parliament, causes taxpayers concern, time and
expense in pursuing objection and appeal procedures.
[11]
According, the Appellant is not entitled to the deductions sought
for his 1995, 1996 and 1998 taxation years. Having abandoned his
appeal for the 1992 taxation year, his appeal for those four
years will be dismissed.
Signed at Ottawa, Canada this 20th day of December, 2000.
"R.D. Bell"
J.T.C.C.
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