David R. Jones v. Minister of National Revenue, [1989] 2 CTC 2412, 89 DTC 627

Bonner, T.C.J.:—The appellant appeals from assessments of income tax for the 1986 and 1987 taxation years. The appellant asserts that he is entitled to deduct in the computation of his income payments made by him at the rate of $200 per month pursuant to a court order for the support of his child. The child was in the custody of the parents of the appellant's former spouse. They were the payees of the amounts in issue.

The facts are not in dispute. By a decree nisi issued by the Supreme Court of Ontario on June 20, 1980, the appellant was divorced from his former spouse. Sole custody of the appellant's son, Jason, was awarded to the appellant’s former spouse. The appellant was directed to pay to her the sum of $200 per month for the support of the child.

The payments now in issue arise under a subsequent order. By that order made by the Supreme Court of Ontario on July 24, 1986, custody of the appellant's son was awarded to William and Barbara Switzer, the parents of the appellant's former spouse. It was further ordered that:

. . .the maintenance provision in the Decree Nisi dated Friday, the 20th day of June, 1980 which provides for maintenance of $200.00 per month to the respondent, SANDRA LEE JONES, be amended to be payable to the Applicants commencing August, 1986.

The appellant argued that it is difficult to imagine that payments made for the support of his son under the July 1986 order are not deductible when payments made under the decree nisi for the same purpose were deductible.

It must be remembered that the cost of supporting one's dependants is a personal cost and not one which enters into the computation of income except where a statutory provision specifically permits the deduction. So long as the child support and custody provisions of the decree nisi remained in effect the payments made by the appellant to his spouse were deductible by virtue of paragraph 60(b) of the Income Tax Act. That provision reads:

60. 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, 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;

After July 24, 1986, the appellant was no longer required to make the payments to his former spouse. Consequently, amounts paid after that date do not fall within paragraph 60(b).

Paragraph 60(b) is enlarged in scope by subsection 60.1(1) of the Income Tax Act. It now [1] provides:

(a) in English:

60.1 (1) Where, after May 6, 1974, a decree, order, judgment or written agreement described in paragraph 60(b), (c) or (c.1), or any variation thereof, has been made providing for the periodic payment of an amount by a taxpayer

(a) to a person who is

(i) the taxpayer's spouse or former spouse, or

(ii) where the amount is paid pursuant to an order made by a competent tribunal after February 10, 1988 in accordance with the laws of a province, an individual of the opposite sex who

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

(B) is the natural parent of a child of the taxpayer, or

(b) for the benefit of the person or children in the custody of the person, or both the person and those children,

the amount or any part thereof, when paid, shall be deemed, for the purposes of paragraphs 60(b), (c) and (c.1), to have been paid to and received by that person.

(b) in French:

60.1(1) Dans le cas où il intervient, après le 6 mai 1974, un arrêt, une ordonnance, un jugement ou un accord écrit visé à l'alinéa 60b), c) ou c.1), ou une modification s'y rapportant, qui prévoit le paiement périodique d'un montant par un contribuable:

(a) soit à une personne qui est, selon le cas:

(i)

le conjoint actuel ou ancien du contribuable,

(ii) si le montant est payé en vertu d'une ordonnance rendue par un tribunal compétent après le 10 février 1988 en conformité avec la législation d'une province, un particulier de sexe opposé:

(A) qui, avant la date de l'ordonnance, vivait avec le contribuable dans une situation assimilable à une union conjugale, ou

(B) qui est le père naturel ou la mère naturelle d'un enfant du contribuable,

(b) soit au profit de la personne, d'enfants confiés à sa garde ou à la fois de la personne et de tels enfants,

tout ou partie du montant, une fois payé, est réputé, pour l'application des alinéas 60b), c) et c.1), payé à la personne et reçu par celle-ci.

Counsel for the Minister was, in my view, correct in arguing that section 60.1 does not serve to bring within the ambit of paragraph 60(b) the pay- merits which were made to the parents of the appellant's former spouse. The English version of paragraph 60.1(1)(b) is by reason of its structure rather ambiguous when it makes reference to "the person or children in the custody of the person. . .”. However, a reference to the French version makes it clear that such person is one who is described in subparagraphs (1) or (ii) of paragraph 60.1(1)(a). It follows the payments made to the parents of the appellant's former spouse are not deductible. The appeals will therefore be dismissed.

Appeals dismissed.