Richard Boudreau v. Her Majesty the Queen (Informal Procedure), [1993] 2 CTC 2717

Archambault, T.C.C.J.:—These appeals, governed by the informal procedure, are from income tax assessments in respect of the 1989 and 1990 taxation years. The respondent disallowed $10,100 and $7,500 for the 1989 and 1990 taxation years respectively which amounts had been claimed as alimony payments by the appellant.

The issue is whether the alimony payments were made pursuant to an order made by a competent tribunal under paragraph 60(c.1) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act").

The relevant facts are not in dispute. The appellant and Danielle Charron commenced a common-law relationship in 1980 and they never married. They had two children: Pascal François and Charles Guy. The appellant and Danielle Charron have been living apart since January 1, 1989, and entered into a written separation agreement on June 13,1989.

It appears that the separation agreement was filed with the office of the Director of Support and Custody Enforcement (the"Director") in accordance with the Support and Custody Orders Enforcement Act, 1985, R.S.O. 1990, c. S-28, on November 15, 1981.

After the tax authorities contacted the taxpayer and the latter realized there was a problem with his deduction for alimony, he sought and obtained an order from the Ontario Court (General Division) dated February 14, 1992, providing for spousal support commencing on July 1 (the year is missing) and for child support commencing on July 1, 1989.

The appellant's first submission dealt with the 1990 taxation year. His position is that the filing of the separation agreement on November 15, 1991, with the Director changed the status of the written separation agreement to that of a court order, and pursuant to subsection 60.1(3) of the Act, its effects were retroactive to 1990.

Subsection 60.1(3) reads as follows:

For the purposes of this section and section 60, where a decree, order or judgment of a competent tribunal or a written agreement made at any time in a taxation year provides that an amount paid before that time and in the year or the immediately preceding taxation year is to be considered as having been paid and received pursuant thereto, the following rules apply:

(a) the amount shall be deemed to have been paid pursuant thereto; and

(b) the person who made the payment shall be deemed to have been separated pursuant to a divorce, judicial separation or written separation agreement from his spouse or former spouse at the time the payment was made and throughout the remainder of the year.

In order to succeed, the appellant must establish that all the conditions of 60(c.1) of the Act have been met. This paragraph reads as follows:

(c.1) an amount paid by the taxpayer in the year, pursuant to an order made by a competent tribunal in accordance with the laws of a province, as an allowance payable on a periodic basis for the maintenance of the recipient thereof, children of the recipient, or both the recipient and children of the recipient if

(i) the order was made

(A) after February 10, 1988, or

(B) before February 11, 1988 and the taxpayer and the recipient jointly elected before the end of the year to have this paragraph and paragraph 56(1)(c.1) apply with respect to the payment,

(ii) at the time the payment was made and throughout the remainder of the year, the taxpayer was living apart from the recipient, and

(iii) the taxpayer required to pay the amount is an individual of the opposite sex who

(A) before the date of the order cohabited with the recipient in a conjugal relationship, or

(B) is the natural parent of a child of the recipient;

It is evident that common-law spouses, contrary to married spouses, can only deduct alimony if the amount is paid pursuant to an order made by a competent tribunal. An amount paid pursuant to a written agreement is not sufficient. The wording of 60(c.1) is to be contrasted to that of 60(b) of the Act.

The appellant submits that the filing of the separation agreement on November 15,1991, transforms the agreement into a court order. He relies on the definition of support order" in section 1 of the Support and Custody Orders Enforcement Act which includes"a provision in a separation agreement that is enforceable under section 35 of the Family Law Act ("F.L.A.")", R.S.O. 1990, c. F-3. Subsection 35(1) of the F.L.A. states that a person who is a party to a domestic contract may file a contract with the clerk of the Ontario Court (Provincial Division) or of the Unified Family Court. If this agreement is filed as provided in this subsection, subsection 35(2) of the F.L.A. stipulates that the agreement may be enforced as if it were an order of the Court where it is filed.

In this particular case, there is no evidence that the agreement was filed with the clerk of the Ontario Court (Provincial Division) or of the Unified Family Court. Therefore, the appellant cannot avail himself of the benefit of section 35 of the F.L.A. [1] Furthermore, nothing in the Support and Custody Orders Enforcement Act gives the status of a court order to a separation agreement filed with the Director of Support and Custody Enforcement.

In my opinion, this submission of the appellant cannot succeed. Nothing in the Support and Custody Enforcement Act supports the proposition that such agreement is deemed to be an“ "order of a competent tribunal”. Having failed to establish that the filing in 1991 of the separation agreement with the director gave it the status of a court order, the taxpayer cannot rely on subsection 60.1(3) to claim the alimony paid during the 1990 taxation year.

With respect to the 1989 and the 1990 taxation years, the taxpayer made the following alternative submission. The alimony payments made in 1989 and 1990 qualified under paragraph 60(c.1) of the Act because they were made pursuant to the court order rendered in February 1992. The appellant took the position that the term “pursuant” did not mean “subsequent, after or following” but adopted the narrow view that it meant “agreeably or conformably". [2] I cannot share this interpretation of the appellant because this definition is not in conformity with the scheme of the Act. I believe that the definition in Black's Law Dictionary,"following after or following out; in accordance with” is more in line with the spirit of the legislation. How can it be said that the taxpayer in the 1989 and the 1990 taxation years paid an alimony pursuant to a court order rendered only in February 1992? The taxpayer could not establish that he had satisfied the condition of 60(c.1) of the Act during the relevant taxation years. In addition, his interpretation would render useless the application of 60.1(3) of the Act deeming amounts paid as alimony in the year immediately preceding the year during which an order was rendered by a competent tribunal.

Furthermore, the assessment of the respondent is in conformity with the decision of the Tax Review Board in the case of Arnold v. M.N.R., [1972] C.T.C. 2235, 72 D.T.C. 1199. In this case, the board held that the taxpayer could not deduct alimony payments made prior to the date of a court order.

In summary, as the appellant has failed to establish that the alimony was paid pursuant to an order of a competent tribunal, this Court accordingly confirms the Minister's reassessments for the 1989 and 1990 taxation years and dismisses these appeals.

Appeals dismissed.