Section 56.1

Subsection 56.1(1)

Administrative Policy

17 September 2008 External T.I. 2008-0279101E5 F - Pension alimentaire - enfant majeur

s. 56.1(1) deemed amounts paid directly to adult child pursuant to court-ordered support obligation to have been received by the other spouse

A payer makes support payments directly to a child over the age of majority with the consent of the former spouse (the "recipient"). However, under the terms of the court judgment, these payments remain payable to the recipient. The support payments are not tax exempt and the child was a minor at the time the judgment was rendered.

CRA stated.

By virtue of subsection 56.1(1) … the recipient is deemed to have received the support payments that were made to the child of the age of majority … [and] subsection 60.1(1) deems the amounts, paid by the payer to the child of the age of majority, to be paid to the recipient.

Thus, to the extent that the amounts paid by the payer represent "support" amounts … the amounts are both deductible by the payer and taxable to the recipient.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 60.1 - Subsection 60.1(1) s. 60.1(1) deemed amounts paid directly to adult child pursuant to court-ordered support obligation to have been paid to the other spouse 145

Subsection 56.1(4) - Definitions

Cases

Broad v. Canada, 2010 DTC 5097 [at 6924], 2010 FCA 146

The taxpayer entered into a written separation agreement with his common law spouse in which he was obligated to make support payments. Several years later, they reconciled for two years, during which no payments were made. They then separated again and payments resumed.

The Court found that the support payments made after the reconciliation attempt were deductible under s. 60(b), on the basis that they were made pursuant to the original separation agreement. Neither party had considered the written agreement to have ever been cancelled. Therefore, the requirement for a written agreement under s. 56.1(4) was satisfied for the post-reconciliation payments.

Beaudry J. also noted (at para. 9) that the taxpayer's situation did not go to the mischief addressed by 56.1(4), which was that fraudulent support arrangements could more easily be alleged in the absence of a writing requirement, leading to unjust tax benefits. He also stated (at para. 10) that Parliament has demonstrated in other statutes a strong intention to encourage reconciliation.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 60 - Paragraph 60(b) 165

Administrative Policy

7 January 2011 Internal T.I. 2010-0389181I7 F - Paiement forfaitaire - pension alimentaire

lump sum support payment did not qualify

Under a written agreement between two former spouses, the one was to receive a single lump sum payment from the other as support. Did it qualify as a support amount? The Directorate responded:

Since the lump sum in this case was not paid in lieu of amounts payable periodically as described in paragraph 22 of … IT-530R … that amount is not a support amount within the meaning of subsection 56.1(4).

Child Support

Cases

Berty v. The Queen, 2013 DTC 1171 [at 935], 2013 TCC 202 (Informal Procedure)

The agreement between the taxpayer and his former spouse stated:

Fifty percent (50%), net of income tax, of any bonus income received by the husband shall be paid to the wife as lump sum child and spousal support (called "bonus payment"). ...

Bédard J dismissed the taxpayer's argument that the general structure of the agreement meant that the mention of "child and spousal support" implicitly meant a 50/50 split between those two categories. Pursuant to the definition of "child support", the failure to explicitly allocate the bonus payments meant that all of the bonus payments were child support - and therefore the taxpayer could not deduct the payments under s. 60.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 56.1 - Subsection 56.1(4) - Support Amount share of bonuses 58

Commencement Day

Cases

Holbrook v. Canada, 2007 DTC 5336, 2007 FCA 145

An interim child support order made requiring the payment to the taxpayer of $1,000 per month was followed by a separation agreement requiring the same amount of child support to be paid to the taxpayer commencing May 1, 1998. Sharlow J.A. concluded that because the interim order ceased to have effect once the separation agreement came into force, the child support payments payable to the taxpayer on and after May 1, 1998 were paid pursuant to a separation agreement with a commencement day that was made after April 1997, with the result that such payments were exempt under the new child support regime.

Dangerfield v. Canada, 2004 DTC 6025, 2003 FCA 480

A court support order specifying that monthly payments of child support were to commence on May 1, 1997 thereby established a "commencement day" notwithstanding that the order was pronounced on a different date (April 21, 1997) and notwithstanding that the order did not contain an express reference that the commencement day was being specified for income tax purposes.

Administrative Policy

21 February 2007 Internal T.I. 2006-0218421I7 F - Pension alimentaire - date d'exécution

retroactive nature of a divorce judgment is to be respected

A divorce judgment issued in 1995 established a child support obligation for Monsieur, but when one of the children moved in with Monsieur, he successfully moved to reduce his support obligations, first obtaining a “safeguard” interim order, and then a final judgment of the Superior Court of Quebec rendered judgment was rendered in 2005 confirming inter alia the support reduction. CRA indicated that the 2006 judgment established a commencement date (so that the old rules ceased to apply) and that, in light of the retroactive nature of the 2006 judgment, the commencement date under subpara. (b)(iii) regarding that judgment was the day on which the modified amounts first became payable in 2003.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date divorce judgment with stated retroactive effect caused the amounts to “be required to be made” on the earlier date 51

26 March 2004 Internal T.I. 2004-0060361I7 F - Date d'exécution

a request for support reinstatement that was styled by the court as a motion to establish support triggered a "commencement day”

The Directorate interpreted a court order to reinstate support as a new order (noting in this regard that “the judge modified the recipient's motion to reinstate (re-enforce) support so that the motion was instead a motion to establish support”), so that it triggered a commencement day under para. (a). In addition, there also was a commencement day under subpara, (b)(ii) as a result of the amount of the support being varied.

Paragraph (b)

Subparagraph (b)(ii)

Administrative Policy

13 July 2004 Internal T.I. 2004-0068521I7 F - Date d'exécution - Affaire Miller

Miller incorrect: change in aggregate (but not per-child) amount triggers commencement date

Miller (2003 DTC 1449) found that a December 16, 1999 order changing support from $475 per month for each of the three children, by terminating support for the first child and maintaining the support at $475 per month for the other two children did not trigger a "commencement day" under s. (b)(ii) of the definition because there was no change in the per-child amount. The Directorate indicated its view that Miller was incorrect: the previous order had a commencement day by virtue of s. (b)(ii) of the definition on the date that the modified amount was first payable since the "child support amount" had changed globally from $1,425 per month to $950 per month.

24 June 2004 Internal T.I. 2004-0068381I7 F - Date d'exécution

change in required support amount triggers commencement day regardless of the number of children covered by the changed support

The Directorate indicated that an amended support agreement that changed the per-month support amount triggered a commencement day. The Directorate noted:

For the purposes of the definition of "commencement day", the child support amount is considered to have been changed if the amount of child support paid is changed … regardless of the number of children covered by that support.

Support Amount

Cases

Tossell v. Canada, 2005 DTC 5365, 2005 FCA 223

The taxpayer worked at the same law practice with her spouse. When they separated, they agreed that she would continue to work at the practice as an employee or, if her employment were terminated, that the monthly support payments from her spouse would increase from $2000 to $3000 per month. Her employment was terminated, but she continued to receive $2000 per month. Following litigation, they settled on the basis that the taxpayer's spouse pay her a sum of $36,000, representing three years' worth of what the settlement agreement called "retroactive additional periodic child support." (This represented a compromise from the taxpayer's original position, as the disputed period was 43 months.)

Sharlow JA accepted the taxpayer's argument that the $36,000 payment was not taxable in the taxpayer's hands because it did not represent payments on a periodic basis. Had the amount been a payment for an arrears of child support, then it would have represented a periodic payment. However, there was little in the agreement to support such a finding. Sharlow JA stated (at para. 46):

The litigation would have involved numerous issues, some involving issues with potential long term effects that would have been more significant than arrears of child support. They might have settled the unpaid child support issues in a way that would formally recognize the arrears, and provide for their payment or partial payment. Or, they might have put aside the issue of arrears of child support and created an entirely new obligation. It is impossible to determine from the record that either one of those solutions would have been more reasonable than the other.

The $36,000 was thus a settlement amount rather than child support.

Ofori-Nimako v. Canada (Attorney General), 2005 DTC 5264, 2005 FCA 195

Money that was found by the Tax Court judge to have been paid by the taxpayer to his daughter rather than to his ex-spouse and over which, moreover, the ex-spouse had no discretion as to its use, did not qualify as a support amount.

Fraser v. Canada (Attorney General), 2004 DTC 6279, 2004 FCA 128

Ss.1(2) and 12(1) of the Maintenance Enforcement Act (Alberta), which provided that a child maintenance agreement filed with the Alberta Director of Maintenance Enforcement which, in turn, was filed by the Director with the Court of Queen's Bench was deemed to be a judgement of the Court, had the effect of qualifying such an agreement as "an order made by a competent tribunal in accordance with the laws of a province" under para. (b) of the definition. Sharlow J.A. noted (at p. 6281) that in the quoted wording Parliament had "indicated that the question of whether there is an order meeting that description is a matter of provincial law".

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Provincial Law 117

Pach v. Canada, 2003 DTC 5634, 2003 FCA 363

An agreement to pay the mortgage payments for a house plus monthly expenses including realty taxes, hydro, gas, telephone, insurance, cable, auto expenses and domestic help represented an obligation for amounts that were "limited and predetermined". Malone J.A. stated (at p. 5636) that "amounts payable can be said to be both predetermined and limited if the agreement defines the enumerated expenses in respect of which they are paid to the recipient in a way that renders the amount certain".

See Also

Vohra v. The King, 2022 TCC 165 (Informal Procedure)

support payments could be considered to be made pursuant to terms of a written separation agreement which had expired

The taxpayer and his wife separated in 2010 and on March 6, 2011, entered into separation agreement without legal counsel. Although the spousal support (set at $3,500 a month) was stipulated to end in December 2014, such support continued to be paid by the taxpayer thereafter and was included by her in her income. The Minister denied the taxpayer’s claimed deduction of $42,000 for the 2018 taxation year on the basis that the payments were made without a written separation agreement being in place. The taxpayer argued that an implied contract continued to exist after 2014, referring (at para. 13) to a statement in Chitty on Contracts that there may “be an implied contract when the parties make an express contract to last for a fixed term, and continue to act as though the contract still bound them after the term has expired and a written agreement.”

In rejecting this submission, MacPhee J stated (at para. 19):

An implied contract … does not meet the requirements of the Act in order to make a deduction of support payments.

In nonetheless allowing the taxpayer’s appeal, MacPhee J stated (at paras. 20-22):

There is no question that the contract the parties relied upon was flawed. Yet it was an agreement in writing, setting out the support payments.

The parties continued through the 2018 taxation year to consider themselves bound by their 2011 separation agreement. …

… I am guided by the plain meaning of the words of the Act … . I have concluded that the payments were made pursuant to the terms of a written agreement.

Words and Phrases
pursuant to

Maheu v. The Queen, 2013 DTC 1261 [at 1452], 2013 TCC 279 (Informal Procedure)

support payments v. compensatory allowance

The taxpayer divorced her spouse and, pursuant to an "agreement for corollary relief," ratified by the Quebec Superior Court, received a total of $173,000 for the taxation years in question in weekly payments of $1000. The Minister characterized these payments as support amounts, and reassessed the taxpayer accordingly.

Favreau J found that the payments could not be construed as support amounts under the terms of the agreement. Although the section that set out the payments was entitled "Support of the female petitioner," the text of the section made it clear that the taxpayer and her spouse agreed to waive their rights to any support. Moreover, the spouse did not deduct the payments on his returns until approximately four years after the agreement was ratified, whereupon he requested an adjustment for his prior returns.

Apart from the text of the agreement, the taxpayer established that the payments were a "compensatory allowance as part of the partition of the family patrimony and the matrimonial regime" - she received the payments in exchange for her share of the business that she operated with her former spouse.

Lemieux v. The Queen, 2014 DTC 1009 [at 2531], 2013 TCC 304 (Informal Procedure)

no obligation to continue incurring the expenses in question

A consent judgment provided that the taxpayer direct a portion of her support payments towards certain home expenses, such as taxes, insurance, heating, and water. Masse J found that the taxpayer nevertheless had discretion as to use of the payments, given that the taxpayer was under no obligation to continue to incur any of the expenses in question.

Berty v. The Queen, 2013 DTC 1171 [at 935], 2013 TCC 202 (Informal Procedure)

share of bonuses

Pursuant to a court order, the taxpayer paid his former spouse one half of any bonuses he received from employment. Bédard J found that such amounts were not "periodic" for the purposes of the "support amount" definition, given that, although a non-payment was unlikely, there was no guarantee that bonuses would be paid every year.

Words and Phrases
periodic

James v. The Queen, 2013 DTC 1135 [at 705], 2013 TCC 164

retroactive court orders

The British Columbia Court of Appeal ordered a retroactive increase in the monthly amount of the support payments the taxpayer paid to his spouse, and was thus made to pay a lump sum equal to the monthly increases. Pursuant to the finding in Dale that retroactive court orders are binding on the Minister for tax purposes, C Miller J found that the lump sum represented payments "on a periodic basis," and therefore comprised support payments.

The present case was distinguishable from Peterson, in which there was insufficient proof that the lump sum in question represented periodic payments.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Effective Date retroactive nature of B.C. court order applied for ITA purposes 113

Doucette v. The Queen, 2013 DTC 1113 [at 604], 2013 TCC 112 (Informal Procedure)

discretion to pay mortgage on matrimonial home
see also Larivière v. The Queen, 2013 DTC 1133 [at 699], 2013 TCC 88 (Informal Procedure)

Amounts the taxpayer received from her spouse were support amounts notwithstanding that she "had a legal responsibility to pay off the mortgage [for the matrimonial home] and as such she had no choice but to make the mortgage payments with the support payments she received," and therefore, according to the taxpayer, she did not have discretion as to their use. Angers J stated (at para. 15):

I agree with Justice Hugessen of the Federal Court of Appeal in McKimmon ... at paragraph 15 where he writes that "common experience indicates that such things as life insurance premiums and blended monthly mortgage payments, while they allow an accumulation of capital over time, are a normal expense of living which are paid from income and can properly form part of an allowance for maintenance."

Kuch v. The Queen, 2013 DTC 1037 [at 175], 2012 TCC 454 (Informal Procedure)

payments to third parties

Woods J. found that the taxpayer's court-ordered support payments to third parties for a former spouse's benefit were not "support amounts" under s. 56.1(4) because, being payments to third parties, the former spouse did not have discretion as to their use.

Bergeron v. The Queen, 2013 DTC 1004 [at 31], 2012 TCC 143 (Informal Procedure)

The taxpayer made payments to his former spouse of $5000, $10,000 and $4200 between 13 July 2009 and 6 August 2009, which freed the taxpayer from future obligations to make support payments. Bédard J. found that the amounts were capital in nature, did not constitute an "allowance on a periodic basis," and therefore were not support amounts, on reasons similar to Lam.

Lam v. The Queen, 2012 DTC 1091 [at 2939], 2012 TCC 54 (Informal Procedure)

Sheridan J. found that the taxpayer could not deduct the $40,000 he paid his former common-law spouse in monthly instalments of $1,500, because (following the McKimmon test) they "were installments on a capital amount rather than an allowance for maintenance" (para. 5). The agreement between the taxpayer and his spouse specified that the taxpayer would be released from any future obligations to pay maintenance. Moreover, the payments were to continue even if the spouse were to die before the payment period concluded.

Hovasse v. The Queen, 2011 DTC 1115 [at 622], 2011 TCC 143 (Informal Procedure)

When a married couple separated, the husband's support payments made pursuant to their "summary of mediated agreements" were deductible. The summary was enough to satisfy the requirement in s. 56.1(4) for an agreement in writing, given that mediated agreements had been finalized and adhered to. Hogan J. stated at para. 11:

The [Minister] also argued that the mediated agreement contained a warning that it could not be construed as a contract or court judgment, meaning it was not intended to be binding. This does not necessarily mean that the parties could not have intended or did not intend to be bound by the agreement. The statement seems to be more of a notification that further steps were required in order for the agreement to be enforceable in a court of law. The parties may not have filed the agreement with a court having jurisdiction in that regard, as advised, but the Appellant gave a reasonable explanation for not doing so, stating that he and his former spouse wanted to avoid legal costs.

Hogan J. attached little weight to the lack of a signature, given that Shaw (2007 TCC 148) and Foley (2000 UDTC 174, [2000] 4 C.T.C. 2016 (TCC)) clearly establish that a signature is not required.

Words and Phrases
agree agreement

Beninger v. The Queen, 2010 DTC 1237 [at 3684], 2010 TCC 301 (Informal Procedure)

The Crown argued that because the maintenance arrears of the taxpayer were reduced due to his diminished financial circumstances, the amounts paid by him to his former spouse pursuant to the amended judicial order "do not represent amounts paid for the maintenance of the former spouse but were, rather, amounts paid to obtain a release from an existing obligation", so that they did not qualify as payments of a "support amount". In rejecting the submission, and finding that the amounts were deductible to the taxpayer, Archambault, J. stated (at para. 22-23):

"... I do not believe that whenever a taxpayer pays an amount less than the amount of arrears of spousal support (or of any other deductible or taxable amount for that matter) one must automatically conclude that the amount so paid is not deductible or taxable because the nature of the payment has changed ... In my view, the situation is different where a person agrees to pay for being released from future obligations, such as the payment of a pension, an annuity or any other kind of future income."

Because the amounts the taxpayer was ordered to pay were for the support originally ordered, albeit reduced as a result of significant changes in his circumstances, the situation was different from that in which a reduced amount was negotiated between him and his former spouse.

Ambury v. The Queen, 2002 DTC 1880 (TCC) (Informal Procedure)

Periodic payments made by the taxpayer to a woman (the mother of his child) with whom he had not lived in a conjugal relationship pursuant to a written agreement that was filed in the Ontario Court of Justice (Provincial Division) did not qualify as a support amount under paragraph (b) of the definition. Although Ontario statutes provided for the enforcement of the agreement through the same mechanism that was available for the enforcement of court orders, they did not deem the agreement to be a court order for purposes other than those of those statutes. Accordingly, the payments were non-creditable.

Administrative Policy

25 May 2011 Internal T.I. 2011-0395871I7 F - Pension alimentaire - désignation rétroactive

monthly interim amounts retroactively declared to be support were “support amounts” in contrast to subsequently declared arrears support

Madame made monthly payments to Monsieur pursuant to an interim agreement (later confirmed by an interim order) between her and him "without admission from either side of the reasons for payment." In a subsequent judgment, the Court retroactively characterized the monthly payments as support amounts and also ordered that Madame pay an additional amount to Monsieur as arrears of support amounts for Monsieur.

In addressing whether these amounts were includible under s. 56(1)(b) in computing the income of Monsieur and deductible under s. 60(b) in computing the income of Madame for the relevant taxation years, the Directorate found that the monthly payments satisfied “the conditions in the definition of support amounts provided for in subsection 56.1(4) at the time they were paid and therefore those amounts are deductible by Madame and taxable to Monsieur.” However, respecting the additional amount ordered to be paid as arrears of support, it:

[did] not constitute an amount of support for the purposes of subsection 56.1(4) since it was not an amount payable or receivable as a periodic allowance. That amount is therefore neither deductible by Madame nor taxable to Monsieur.

15 March 2006 External T.I. 2005-0124911E5 F - Prestation compensatoire française

life annuity, but not lump sum, received from divorced ex-spouse in France as “compensatory allowances” under the French Civil Code was taxable as support

A resident of France was awarded compensatory allowances by order of the applicable French court on her divorce from her husband, consisting of a lump sum (payable in two instalments separated by a year) and a life annuity payable on a monthly basis. She became a resident of Canada. Withholding tax was levied by the French tax authorities on the life annuity but not on any portion of the lump sum.

CRA found that the lump sum was not includible in her income being a capital sum that was intended to “equalize the resources of the two spouses following the dissolution of the marriage,” but that the life annuity was includible in her income as a support amount as it was for support, she had full discretion as to the use of the funds, it was payable periodically, pursuant to an order of a court of competent jurisdiction and the payee and payor were living separate and apart due to marriage breakdown.

Locations of other summaries Wordcount
Tax Topics - Treaties - Income Tax Conventions - Article 18 life annuity, was to be treated for Treaty purposes as alimony or similar payments since it was treated by CRA as a support amount under ITA 210
Tax Topics - Treaties - Income Tax Conventions - Article 3 treatment of a life annuity under ITA, as a support amount meant that it was to be treated for Treaty purposes as alimony or similar payments 136
Tax Topics - Treaties - Income Tax Conventions - Article 21 non-taxability of lump sum compensation allowance under French law not altered by Art. 21 59

21 June 2005 Internal T.I. 2005-0123551I7 F - Montant forfaitaire de pension alimentaire

support amounts included annual top-up amounts

A divorce judgment endorsed an agreement on ancillary measures (the "Agreement") pursuant to which the taxpayer (the “husband") was obligated to pay not only monthly indexed support amounts but also lump annual amounts geared to his year end bonuses or other variable remuneration. In finding that these annual amounts also qualified as support amounts, the Directorate noted that they represented a certain portion of his variable compensation, they were time-limited (lasted until retirement), and took into account the income and financial circumstances of each party.

28 September 2004 Internal T.I. 2004-0079801I7 F - Pension alimentaire

settlement of support arrears are not deductible or includible

The Directorate applied the proposition that:

Where support arrears are settled for less than the amounts actually in arrears, the amounts paid and received in accordance with the settlement, whether in a lump sum or by instalments, are not deductible to the payer and are not taxable to the recipient.