Date: 20021211
Docket: 2002-45-IT-I
BETWEEN:
FREDERICK J. ARTES,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
and
LEONILA ARTES
Added Party.
Reasons for Judgment
Beaubier, J.T.C.C.
[1] This appeal pursuant to the Informal Procedure was heard at Toronto, Ontario on November 20, 2002. The Appellant and his former wife, Leonila both testified.
[2] Leonila was joined in this appeal pursuant to an application by the Respondent under section 174 of the Income Tax Act ("Act") for the determination of a question. The following are the particulars thereof:
A. TAXPAYERS TO BE BOUND BY THIS REFERENCE:
1. It is intended that the following taxpayers shall be bound by the determination of the questions herein:
(a) Frederick J. Artes
Address: 1049 Blueheron Boulevard
Mississauga, Ontario, L5V 2J8
(b) Leonila Artes
Address: 5472 Whitehorn Avenue
Mississauga, Ontario, L5V 1V5
B. THE ASSESSMENTS OR PROPOSED ASSESSMENTS IN RESPECT OF WHICH A DETERMINATION IS SOUGHT:
2. Determination of the question herein is sought in relation to:
(a) A Notice of Assessment dated September 5, 2000 in respect of the 1999 taxation year of Mr. Artes;
(b) A proposed reassessment in respect of the 1998 taxation year of Mr. Artes [should the answers to 3(a) and (b) be answered in the negative];
(c) A proposed reassessment in respect of the 1999 taxation year of Ms. Artes [should the answers to 3(a) and (c) be answered in the affirmative];
(d) A proposed reassessment in respect of the 1998 taxation year of Ms. Artes [should the answers to 3(a) and (c) be answered in the affirmative].
C. THE QUESTIONS IN RESPECT OF WHICH THE MINISTER OF NATIONAL REVENUE REQUESTS A DETERMINATION:
3. The questions in respect of which a determination is sought are:
(a) Whether amounts paid by Mr. Artes to Ms. Artes in the 1998 and 1999 taxation years were paid pursuant to a written agreement;
(b) Whether amounts paid by Mr. Artes to Ms. Artes in the 1998 and 1999 taxation years are deductible in computing Mr. Artes' income pursuant to paragraph 60(b) of the Act; and
(c) Whether amounts paid by Mr. Artes to Ms. Artes in the 1998 and 1999 taxation years are includable in computing Ms. Artes' income pursuant to paragraph 56(1)(b) of the Act.
[3] For brevity's sake, paragraph D of the Application is quoted by item, so that the subject of the dispute can be dealt with more succinctly based upon the evidence.
D. THE FACTS AND REASONS ON WHICH THE MINISTER RELIES AND HAS BASED OR INTENDS TO BASE ASSESSMENTS OF TAX PAYABLE BY EACH OF THE TAXPAYERS NAMED IN THE APPLICATION:
4. In issuing the Notice of Assessment dated September 5, 2000, with respect to the 1999 taxation year of Mr. Artes, and in regards to the proposed reassessment of Ms. Artes with respect to the 1999 taxation year, the Minister relied or intends to rely upon the following facts, reasons, or assumptions of fact made by the Minister:
(a) There are four children of the marriage. They are named Sheila Artes, Suzy Artes, Sarah Artes and Stephanie Artes;
There are four children of the marriage. Their names are not in evidence. Two are now in university, one in college and one in high school.
(b) Mr. Arties is married to Ms. Artes;
True.
(c) At all material times since September of 1990, Mr. Artes has lived separate and apart from Ms. Artes due to a breakdown of the marriage;
True.
(d) Mr. Artes and Ms. Artes made or had a mutual oral agreement (herein referred to as "The oral agreement") in 1990 with regards to support payments to be paid to Ms. Artes for spousal and child support;
(e) Pursuant to the oral agreement, Mr. Artes was to pay $1,000 per month in cash or cheque to Ms. Artes to support her and the four children;
Both are true.
[4] It is here that the problem arises. The Artes had an oral agreement in 1990 between themselves. The Court accepts their testimony that on May 15, 1992 they signed a written agreement that Mr. Artes would pay the support. It is Exhibit A-1 which reads:
MUTUAL AGREEMENT
WE, Frederick J. Artes and Leonila C Artes, both of legal age, Canadian citizen, and presently separated and living apart as husband and wife has this mutual agreement signed this 15th of May 1992.
That I, Frederick J. Artes agree to give a monthly support payment of $1,000.00 a month for her and our four (4) children, Sheila, Suzy, Sarah and Stephanie all surnamed Artes.
That I, Leonila C Artes will accept the monthly support payment of $1,000.00 every 15th day of the month, for whatever purposes or expenditures I may deem necessary.
That WE, Frederick J. Artes and Leonila C Artes had this mutual agreement not to bring this matter to court as long as I, Frederick J. Artes will fulfill the above mentioned agreement and my duties and obligations to our four (4) children, Sheila, Suzy, Sarah and Stephanie.
Signed By: ...
[5] Mr. Artes testified that he misplaced it and that Ms. Artes could not find it. She stated that he asked her for it, and that she was receiving cancer treatments and taking drugs for pain and depression. As a result she did not do anything about it at first. Then in about 2001 she searched for it and found it in some boxes where it had been packed during at least one move. She is believed, as is Mr. Artes.
[6] To carry on with D. 5. (f), etc.:
(f) Mr. Artes, in computing his income for the 1999 taxation year, deducted the amount of $15,500.00 as support payments made in the year;
Mr. Artes could only afford to pay $9,000 in 1998. In 1999 he paid $15,500 to make up the arrears. As a result, the arrears he paid Ms. Artes in 1999 was $3,000, the current payments were $12,000 and $500 was over-claimed by Mr. Artes because it was more than the correct amount.
(g) In regards to the payments received by Ms. Artes in the 1999 taxation year, no amount was included in her income as a support amount received in the year;
Is correct. Ms. Artes stated that she believes that the $1,000 is the children's and not hers. Therefore she is of the opinion that she need not report it. She insisted on this when she was advised to the contrary in cross-examination. The Court believes that she is honest and sincere in this mistaken belief.
(h) The deduction taken by Mr. Artes in the 1999 taxation year was a deduction for payments not made in the year under a decree, order or judgment of a competent tribunal or under a written agreement; and
(i) Mr. Artes' payments to Ms. Artes made in the 1999 taxation year were paid pursuant to the oral agreement, and receivable by Ms. Artes under the oral agreement.
Subject to the foregoing restriction respecting the $500, on the basis of the foregoing findings, the Court finds these assumptions of fact to be false.
[7] Therefore, in response to the questions posed in paragraph C. 3., the Court determines:
(a) The amounts paid by Mr. Artes to Ms. Artes in 1998 were pursuant to a written agreement; $15,000 paid by Mr. Artes to Ms. Artes in 1999 was pursuant to a written agreement.
(b) $9,000 paid in 1998 and $15,000 paid in 1999 is deductible to Mr. Artes.
(c) The $15,000 is includable in computing Ms. Artes' income pursuant to paragraph 56(l)(b) of the Act, for 1999, based on her income tax return filed for 1999. The sum of $9,000 paid by Mr. Artes to Ms. Artes in 1998 is includable in computing Ms. Artes' income pursuant to paragraph 56(1)(b) of the Act.
Signed at Vancouver, British Columbia, this 11th day of December, 2002.
|
"D. W. Beaubier" |
J.T.C.C.COURT FILE NO.: 2002-45(IT)I
STYLE OF CAUSE: Frederick J. Artes v. The Queen
v. Leonila Artes
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: November 20, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge D. W. Beaubier
DATE OF JUDGMENT: December 11, 2002
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Nimanthika Kaniera
For the Added Party: The Added Party herself
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-45(IT)I
BETWEEN:
FREDERICK J. ARTES,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
and
LEONILA ARTES
Added Party.
Determination of question heard on November 20, 2002 at Toronto, Ontario, by
the Honourable Judge D. W. Beaubier
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Nimanthika Kaneira
For the Added Party: The Added Party herself
JUDGMENT
The Court makes the determination posed by the questions described in the attached Reasons for Judgment.
Signed at Vancouver, British Columbia, this 11th day of December, 2002.
|
"D. W. Beaubier" |
J.T.C.C.