Section 60.1

Subsection 60.1(1) - Support

Cases

The Queen v. Armstrong, 96 D.T.C 6315 (FCA)

Monthly mortgage payments made by the taxpayer for the benefit of his former wife did not qualify for deduction because they did not represent an allowance as defined in s. 56(12), i.e., the former wife had no discretion as to the use of the monies in question. If s. 60.1(1) were read as not being subject to the conditions set out in ss.60(b), (c) and (c.1), and decree, order, judgment or written agreement would theoretically fall within the descriptions, a result which could not have been intended.

Philp v. The Queen, 83 DTC 5424, [1983] CTC 403 (FCTD)

Payments made pursuant to an agreement dated April 10, 1973 thus were not made pursuant to an agreement made after May 6, 1974, and therefore were not deductible.

The Queen v. Bryce, 82 DTC 6126, [1982] CTC 133 (FCA)

While s. 60.1 deems periodic mortgage and utility payments made pursuant to a judicially-approved maintenance agreement to have been made directly to the benefiting spouse, it does not deem those amounts to have been paid as an "allowance". S.60.1 therefore does not affect the non-deductibility of such payments under s. 60(b).

See Also

Poirier v. The Queen, 2011 DTC 1346 [at 1937], 2011 TCC 311

When the taxpayer separated from his wife, he continued making payments to third parties related to the matrimonial home. Jorré J. found that the payments were not deductible under s. 60.1(1) because they were not made pursuant to a written agreement, and so did not meet the definition of "support amount" in s. 56.1(4). He also noted that the "support amount" definition requires that, for payments to qualify as support amounts under s. 60.1(1), the agreement must provide that ss. 60.1(2) and 56.1(2) shall apply. He stated (at para. 34):

[I]t must be clear from the agreement that the parties intention is that the payer will be able to deduct the amounts in his income tax returns and that the recipient must include them. It is not necessary for the agreement to refer to ITA provisions.

Administrative Policy

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

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

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 56.1 - Subsection 56.1(1) 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 145

7 January 1992 Memorandum (Tax Window, No. 15, p. 21, ¶1684)

Payments made to an adult child of the marriage for the child's benefit would not qualify as payments made for the benefit of the spouse or children in the custody of the spouse.

Subsection 60.1(2) - Agreement

Cases

The Queen v. Armstrong, 96 D.T.C 6315 (FCA)

S.60.1(2) had no application as the court order in question did not provide for the application of that provision.

Administrative Policy

28 May 2004 Internal T.I. 2004-0064291I7 F - Paiement de dépenses

no need to expressly refer to ss. 56.1(2) and 60.1(2)

After indicating that payments made by Monsieur to third parties pursuant to a cohabitation agreement to cover expenses relating to the matrimonial home (e.g., taxes and mortgage payments) did not have all the attributes of support, i.e. an amount that Madame could use at her discretion, as required by s. 56(12), the Directorate went on to indicate that because the text of the agreement did not provide for the application of ss. 56.1(2) and 60.1(2) to those payments, they were not deemed to be support by s. 60.1(2).

However, after referring to Veilleux, the Directorate stated:

[E]xpress reference to subsections 56.1(2) and 60.1(2) is no longer required in the written agreement, order or judgment. It is important, however, to ensure that the purpose of subsections 56.1(2) and 60.1(2) is clearly reflected in the wording of those documents and, inter alia, that the recipient knowingly assumes a tax burden in connection with third-party payments made by the payer of expenses covered by subsections 56.1(2) and 60.1(2).

24 November 1995 Administrative Letter 9527222 - WHETHER PAYMENTS ARE FOR "MAINTENANCE" OR CAPITAL

The agreement of a separated husband to pay the principal and interest on a first mortgage to be incurred by his wife are not deductible under s. 60.1(2) because they represented instalments against this capital sum owing to her, rather than expenses for maintenance, as required by "A" of s. 60.1(2).

21 August 1992 Memorandum (Tax Window, No. 23, p. 23, ¶2163)

General comments.

Subsection 60.1(3) - Prior payments

Cases

Chabros v. The Queen, 95 DTC 5247, [1995] 1 CTC 333 (FCA)

Minutes of settlement signed in 1989 in which the taxpayer's former spouse acknowledged that the taxpayer had paid to her "as and by way of maintenance during the calendar year 1988, the sum of $18,200" did not satisfy the requirement that the agreement provide that prior payments be considered to have been paid and received pursuant to the agreement.

Administrative Policy

22 October 2004 Internal T.I. 2004-0079791I7 F - Pension alimentaire

s. 60.1(3) did not apply since the judgment recognizing the amounts paid as support was given more than one year later

S. 60.1(3) did not apply where sums were paid by Monsieur to Madame, which he intended as an advance on the division of the family patrimony (which occurred subsequently pursuant to a divorce decree), and where a subsequent provisional judgment indicated that such sums were for maintenance purposes, given that they were not paid pursuant to a written order or agreement and given that s. 60.1(3) could not apply because the amounts were paid more than one year before such provisional judgment recognized them as support.