Jardine v. The Queen, docket 96-4527-IT-I (Informal Procedure)

Date: 19970930

Docket: 96-4527-IT-I

BETWEEN:

BRIAN JARDINE,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Beaubier, J.T.C.C.

[1]            This appeal pursuant to the Informal Procedure was heard at Halifax, Nova Scotia on September 26, 1997. The Appellant was the only witness.

[2]            The issues between the parties are set out in paragraph 11 of the Reply to the Notice of Appeal. It reads:

11.            In so reassessing the Appellant for the 1993 taxation year, the Minister made the following assumptions of fact:

(a)            the Appellant and his common law spouse, Glennie, separated in May 1993;

(b)            the Agreement between the Appellant and his former spouse required the Appellant to pay as maintenance the sum of $3,000 monthly from July 1, 1993 to and including December 1, 1993;

(c)            the Appellant paid the entire amount for the 1993 taxation year in one payment of $18,000 in July 1993;

(d)            the Appellant is entitled to a deduction of $3,000 for maintenance payments for the 1993 taxation year as it was the only amount paid on the periodic basis for the maintenance of the recipient pursuant to paragraph 60(b) of the Income Tax Act (the "Act");

(e)            the remaining $15,000 was not an amount paid by the Appellant in the year as alimony or other allowance payable on a periodic basis for the maintenance of the recipient.

[3]            The Appellant takes issue with subparagraphs (d) and (e). He testified that he paid the $18,000 in advance on his six payment due from July through December, 1993, in July, 1993 because he had severed his employment and he had the money to pay Glennie in July. He only paid her the amounts due under their Agreement, no more and no less.

[4]            Paragraph 60(b) of the Income Tax Act respecting 1993 reads:

There may be deducted in computing a taxpayer's income for a taxation year such of the following amounts as are applicable:

...

(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;

                                                                                                italics supplied

[5]            In argument, Respondent's counsel stated that the Appellant was assessed because his payments were not in arrears when the Appellant paid the $18,000, therefore the Minister felt that the Appellant did not owe the money he paid Glennie.

[6]            The payment of $18,000 was on account of periodic payments payable. There is no evidence that Glennie ever sued for arrears or claimed that the Appellant gave her any money. The Appellant testified that all he ever paid her were the payments payable under the agreement.

[7]            The $18,000 cannot be envisaged as a capital sum or accumulation. They met the obligation of the agreement in that year. In the Court's view the Appellant is to be commended for his act in paying after becoming unemployed in order that his obligation to Glennie would be honoured.

[8]            There is no evidence that either party was dissatisfied with the payment or what it represented. The evidence indicates that the Minister of National Revenue assessed on the basis of an assumption contrary to the transaction of the appellant and Glennie.

[9]            The appeal is allowed.

[10]          The Appellant is awarded party and party costs which are fixed at $700.00.

Signed at Ottawa, Canada, this 30th day of September, 1997.

D.W. Beaubier

J.T.C.C.