Edward D Arnold, Jr v. Minister of National Revenue, [1972] CTC 2235, 72 DTC 1199

A J Frost:—This is an appeal from an income tax assessment dated August 6, 1969 in respect of the appellant’s 1968 taxation year wherein a claim for alimony and maintenance amounting to $7,500 was disallowed as not coming within the meaning of paragraph 11 (1)(l) of the Income Tax Act. The Minister of National Revenue confirmed the assessment on April 29, 1970. The appeal was heard at Calgary, Alberta on September 23, 1971 by the Tax Appeal Board as it was then constituted.

The relevant facts of this case as presented to the Board and as established during the trial were as follows. On March 6, 1968 the appellant’s wife had commenced an action for judicial separation. On December 20, 1968 the Supreme Court of Alberta granted a judicial separation, paragraph 4 of which order states:

That the Defendant do pay to the Plaintiff the sum of One Hundred and Fifty ($150.00) Dollars per month for the maintenance of the Plaintiff and the sum of One Hundred ($100.00) Dollars per month for the maintenance of each of the infant children, such payments to commence on the first day of March, 1968, and continue on the first day of each and every month thereafter.

Prior to the issuance of the order, the appellant paid to his wife ten monthly sums of $600 each and $1,442.61 of back income taxes. The respondent in his Reply to Notice of Appeal stated the facts to be as follows:

(c) that during the calendar year 1968 E D Arnold Jr, made payments to Alice Ann Arnold as follows:

February 1, 1968	$600.00
March 1, 1968	$600.00
April 30, 1968	$600.00
May 31, 1968	$600.00
July 2, 1968	$600.00
August 7, 1968	$600.00
September 3, 1968	$600.00
October 3, 1968	$600.00
November 4, 1968	$600.00
December 2, 1968	$600.00

(d) the $7,500.00 claimed by the Appellant as a deduction from his income for the 1968 taxation year consisted of the $6,000.00 referred to in paragraph “c” above plus payments on account of Alice Ann Arnold’s income tax of $1,442.61, and certain other minor amounts.

(The italics are mine.)

The evidence adduced at the hearing indicates that the appellant’s wife did not receive payments or benefits in the exact sum of $7,500 and that the Statement of Facts contained in the Reply to Notice of Appeal was incorrect in this respect. The only tie-in between the $7,500 amount and the benefits conferred on the appellant’s wife is to be found in the statement of settlement between the appellant and his spouse which reads as follows:

It will be noted that the cash payments to Alice Ann Arnold are represented as advances brought into hotchpotch in order to give effect to the judicial order of the Supreme Court of Alberta dated December 20, 1968.

In the above statement of settlement prepared by the appellant’s solicitor, the appellant was debited with all chargeable items owing to his estranged wife and credited with all amounts transferred or paid to her “in advance”. The balancing item was a single cash payment of $37,740.23 reflecting the net amount owing to the appellant’s wife. In my opinion the net payment was in full satisfaction of the order of the Court, and its constituent elements in so far as they relate to income, and not to capital, could possibly have come within the mean- ing of paragraph 11(1 )(l) of the Income Tax Act, but the order reads “such payments to commence on the first day of March, 1968’’ which effectively destroys any possibility of these payments being considered as advances for income tax purposes. As the said order was not issued until December 20, 1968 and the 1968 payments were prior thereto, the payments cannot be considered as coming within the language of the said paragraph 11 (1 )(l) of the Act.

Appeal dismissed.