Brulé, J.T.C.C.:—This appeal was brought under the informal procedure of the Tax Court of Canada Act, R.S.C. 1985, c. T-2. It involves the appellant’s 1991 taxation return in which the Minister of National Revenue ("Minister") has denied a deduction of $4,660 claimed on account of alimony.
Facts
The appellant and his wife contemplated separation and divorce in 1990. To this end they prepared, in rough form, possible monthly expenditures which approximated about $1,000 per month for the wife. After separation in November of 1990 a preliminary separation agreement ("agreement") was prepared with the help of a lawyer. This was not signed.
The main agreement between the appellant and his separated spouse was entered into on March 27, 1991. The appellant had put money into a joint bank account from which the spouse could write cheques and have credit card charges paid for by the appellant. For the four month period from January 1, 1991 to April 30, 1991 the amounts totalled $4,660.
In June of 1991 a decree nisi was obtained ending the marriage and making specific dollar payments for the former spouse and children.
Issue
The sole issue to be determined is whether the amount of $4,660 representing payments to the separated spouse is deductible in computing the appellant's income in the 1991 taxation year.
Appellant's position
The Court was told that the payments made from January 1, 1991 to April 30, 1991 should be allowable deductions under paragraphs 60(b) and (c) and subsection 60.1(3) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act"). Counsel reasoned that the amounts placed in the joint bank account were specific payments from specific sources. Reference was made to paragraph 5(a) of the March 27, 1991 agreement which in Appendix A thereto contemplated expenses for the separated spouse and children, and generally the amounts set out were adhered to.
Specific reference was made to subsection 60.1(3) of the Act which deems amounts paid before an agreement is entered into are deemed to have been paid pursuant to the agreement. The payments into the joint account were periodic as opposed to random.
All of the payments by the appellant were said by his counsel to conform to the provisions of the Act and the appeal should be allowed.
Respondent's position
Counsel for the Minister allowed that the appellant made the payments for his separated spouse indirectly by means of the March 27, 1991 agreement. That agreement did not provide that either subsections 56.1(2) and 60.1(2) were to apply to any payments made pursuant to the agreement and that such payments paid by the appellant and received by the spouse were an allowance on a periodic basis. It was suggested that the amounts were not paid pursuant to a decree, order or judgment of a competent tribunal or pursuant to a written agreement. In addition the amount was not said to be paid for the maintenance of the recipient, children of the marriage, or both the recipient and children of the marriage. Finally, counsel contended that the amount was not payable on a periodic basis.
Analysis
There is no doubt that the appellant intended to properly care for his estranged family. Morally he was correct but not so legally. The Federal Court of Appeal considered such a situation in the case of Hodson v. The Queen, [1988] 1 C.T.C. 2, 88 D.T.C. 6001, wherein it was said by Heald, J. at page 5 (D.T.C. 6003):
Applying that approach to the paragraph in question, I conclude that the words employed by Parliament in paragraph 60(b) must be interpreted “in their ordinary grammatical sense". I am unable to ascertain anything in the context or purpose of the statute or the circumstances of use which would justify an interpretation different from that resulting from a literal interpretation. The language used is clear and unequivocal. In order for the alimony payments to be deductible, there must be either a court order or written agreement which requires such payment.
Also in this case the payments were not made to the appellant's spouse. The use of a joint bank account does not meet the requirements of the Act. In addition, the original monthly estimates of 1990 and those in Appendix A to the March 27, 1991 agreement do not conform to the actual expenditures which make up the amount of $4,660 as verified by Exhibit A-6. In the former there were amounts for mortgage payments which were not in the audited amount. In the latter payments were shown for a vehicle. There is no nexus between the two even though the resulting amounts are similar.
Finally the statute is quite clear and in this case the obligation turned out to be a moral one rather than a legal one and such is not sufficient to claim a deduction.
The appeal is dismissed.
Appeal dismissed.
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