Pratte, J (per curiam) (judgment delivered from the Bench):
1 The only question raised by this appeal is whether, in computing his income for the 1969, 1970 and 1971 taxation years, the respondent was authorized to deduct certain sums that he paid to his former wife.
2 On February 1, 1967 the respondent and his wife entered into a separation agreement which provided for the payment, by the respondent to his wife, of fixed monthly allowances for her maintenance and that of their three children and, in addition, contained the following stipulations:
14. THE Husband agrees to pay all medical, hospital and dental accounts on behalf of the Wife and infant children of the marriage for such period as they are entitled to maintenance under this agreement and such accounts are to include all drugs prescribed by a medical doctor.
15. THE Husband is to provide all educational expenses for the infant children which shall include books, transportation and tuition fees which said expenses shall include University, College or post high school education (Teachers College; Ryerson Institute; Business College, etc.)
3 The respondent's marriage was later dissolved by divorce. The decree nisi, dated October 31, 1969, read in part as follows:
AND THIS COURT DOTH FURTHER ORDER AND ADJUDGE that the Respondent, Morton Gerrard Pascoe, do pay to the Petitioner for the support and maintenance of the said infant children of the Petitioner and the Respondent, Morton Pascoe, namely, Paula Pascoe, Carolyn Pascoe, and Naomi Pascoe as provided for in paragraphs 12, 13, 14 and 15, which paragraphs read as follows:
The enumerated paragraphs of the separation agreement were then quoted.4 It is the deductibility of amounts paid by the respondent under the above quoted portions of the separation agreement and of the decree that is here in question. The Trial Division held that the sums paid by the respondent for the education of his children were deductible but that the sums paid for the medical expenses were not. From that judgment there is both an appeal and a cross-appeal.
5 The deductibility of amounts paid by a taxpayer to his spouse or former spouse for the maintenance of the spouse and the children of the marriage is governed by paragraph 11(1)(l) which reads thus:
11. (1) Notwithstanding paragraphs (a), (b) and (h) of subsection (1) of section 12, the following amounts may be deducted in computing the income of a taxpayer for a taxation year:(l) 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 agree ment, 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;
6 In our view, neither the sums paid by the respondent for the education of his children nor those paid for the medical expenses were deductible.
7 First, we are of opinion that the payment of those sums did not constitute the payment of an allowance within the meaning of paragraph 11(1)(l). An allowance is, in our view, a limited predetermined sum of money paid to enable the recipient to provide for certain kinds of expense; its amount is determined in advance and, once paid, it is at the complete disposition of the recipient who is not required to account for it. A payment in satisfaction of an obligation to indemnify or reimburse someone or to defray his or her actual expenses is not an allowance; it is not a sum allowed to the recipient to be applied in his or her discretion to certain kinds of expense.
8 Furthermore, even if the payment of the expenses here in question could be construed as the payment of an allowance, it was not, in our view, an allowance “payable on a periodic basis” as required by paragraph 11(1)(l). The payment was not determined by the separation agreement and the decree nisi to be at fixed recurring intervals of time. Indeed, the agreement and decree said nothing about when payment of the expenses must be made. It is not relevant that the educational expenses may, in fact, have been paid on a periodic basis since the periodicity required by the statute refers to the manner in which the allowance is payable, not to the manner in which it is in fact paid.
9 For these reasons, the appeal will be allowed and the cross-appeal will be dismissed.
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