James Andrychuk v. Minister of National Revenue, [1986] 2 CTC 2214, 86 DTC 1667

Couture, C.J.T.C.:—The appellant filed an appeal against an assessment for the taxation year 1981 and acting on his own behalf disclosed the following facts.

He was married on the 30th day of October 1965 and two children were born from this marriage.

In 1976 he separated from his wife and on the 26th of August 1980 a petition for divorce was filed on his behalf. A Decree Nisi (the Decree) was pronounced by the Supreme Court of Ontario on February 18, 1981 and made absolute by judgment dated June 25, 1981.

The Decree ordered that the appellant pay to his former wife for support of the children $150 per month per child, commencing on the 1st of March 1981 until certain future events occur, but which are not relevant for the purposes of this appeal.

It was further ordered by the Decree that the maintenance payments for the children be reviewed on an annual basis with a view to increasing or decreasing them according to changes in the circumstances of the parties.

No other provisions contained in the Decree are relevant to this appeal.

In 1980 the appellant provided child support to his wife in a similar amount of $150 per month per child and these payments were made pursuant to a letter written to him by his wife on or about November 15,1980 in which she asked him, inter alia, that he "pay child support around the $300 per month mark.” The appellant without formally acknowledging this letter or agreeing in writing to its terms made the payments accordingly.

In filing his income tax return for the taxation year 1981 the appellant claimed as a deduction in computing his income an amount of $4,300 as child support paid to his former wife for his two children.

The breakdown of this amount was as follows:

In assessing the appellant the respondent allowed as a deduction $3,000 out of the $4,300 or $300 a month from March 1 to December 31, 1981 in accordance with the provisions of the Decree. The excess or $1,300 was disallowed on the ground that it was not paid pursuant to a written agreement between the parties or was in excess of the amount authorized under the Decree.

The appellant submitted in his argument that the letter of November 15, 1980 signed by his wife but not by himself containing the terms of what could be considered as a separation agreement, and upon which he fully complied, should be construed as a "written agreement” as required under paragraph 60(b) as a condition precedent to the deductibility of support payments. The Court cannot accept such a contention. The Courts have considered in numerous instances what constitutes a "written agreement” for the purpose of paragraph 60(b) and its predecessor 11 (1)(l) (both subsections are identical) and have been consistent in their findings as to the meaning of the expression “written agreement” for the purpose of paragraph 60(b).

In a decision of the then Tax Appeal Board, R.S.W. Fordham, Q.C., its assistant chairman, said in Edward Kostiner v. M.N.R., 32 Tax ABC 124 at 125; 63 D.T.C. 478 at 479:

The Board has held consistently that informal writings such as correspondence and memoranda between a husband and a wife, or between their respective solicitors, will not be acceptable as evidence of the right to deduct alimony or maintenance payments from the payer's taxable income. The wording of section 11 (1 )(l) is reasonably clear and means just what it implies. It contains no reference whatever to correspondence and other informal writings . . . . The relevant provisions of the Income Tax Act create no ambiguity or uncertainty that I have been able to detect.

For the above reasons the amounts of $300 per month paid in January and February 1981, prior to the Decree, were not deductible in computing his income for the said taxation year.

As to the payments effected during the taxation year under appeal which were in excess of the amount authorized under the Decree, the Court must arrive at the same conclusion, that such amounts were not paid pursuant to a court order or a written agreement and therefore were not deductible in computing his income.

The appellant contended that since the Decree provided that the maintenance payments for the children had to be reviewed on an annual basis with a view to increasing or decreasing them according to the circumstances of the parties that these additional amounts had been paid in compliance with this requirement.

The Court cannot agree with the appellant that even if he was attempting to comply with the requirement of the Decree that this was sufficient authority to validate the deductibility of these excess payments.

Changes in a Decree cannot be left to the discretion of the parties, as they must be sanctioned by the Court from which the Decree itself emanated.

The appeal is dismissed accordingly.

Appeal dismissed.