Date: 20010426
Docket: 2000-4693-IT-I
BETWEEN:
DAVID SPIRIG,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Beaubier, J.T.C.C.
[1] This appeal pursuant to the Informal Procedure was heard at Calgary, Alberta on March 28, 2001. The Appellant was the only witness. He has appealed disallowed claims for his 1998 taxation year:
1. To deduct $9,000 as child support payments, and
2. For a non-refundable tax credit of $5,380 as an equivalent-to-spouse amount.
[2] Paragraphs 11 to 16 of the Reply to the Notice of Appeal read:
11. In so reassessing the Appellant, the Minister made the following assumptions of fact:
(a) the Appellant was married to Valerie Spirig (the "Spouse");
(b) the Appellant and the Spouse had two children, Rachael (born November 26, 1980) and Mathew (born May 11, 1982);
(c) a child support agreement was signed on June 10, 1996 which stated as follows:
(i) the Appellant shall commence making child support payments of $500.00 per month per child, on July 1, 1996, and
(ii) the Appellant will only make the payments if the children are residing with the Spouse and only until the children are 18;
(d) no order existed prior to the child support agreement being signed;
(e) a separation agreement was signed on May 21, 1998 which included the following:
(i) the Appellant shall commence making child maintenance payments for Rachael, of $411.00 per month, on November 1, 1997,
(ii) the Spouse acknowledges receiving $500.00 per month per child from July 1, 1996 to October 1, 1997, and
(iii) should the child, Mathew, return to residing with the Spouse, the Appellant shall revert back to paying child maintenance payments of $500.00 per month per child.
(f) in the 1998 taxation year the Appellant made Payments totaling $9,466.00;
(g) the child, Rachael, resided with the Spouse for the entire period under review;
(h) the child, Mathew, resided with the Appellant from January to April, 1998 and from November to December, 1998; the remainder of the year the child resided with the Spouse.
B. ISSUES TO BE DECIDED
12. The issues to be decided are:
(a) whether the appellant is entitled to a deduction for the Payments pursuant to subsection 60(b) of the Income Tax Act (the Act) for the 1998 taxation year; and
(b) whether the Appellant is entitled to the Amount as defined by paragraph 118(1)(a) of the Act in computation of his non-refundable tax credits for the 1998 taxation year.
C. STATUTORY PROVISIONS, GROUNDS RELIED ON AND RELIEF SOUGHT
13. He relies on paragraph 60(b), subsection 118(5), and section 56.1 of the Act as amended for the 1998 taxation year.
14. He submits that the commencement date of the order was after April 1997 and therefore the Payments are not deductible pursuant to paragraph 60(b) of the Act.
15. He submits that the Appellant is not entitled to a deduction pursuant to paragraph 60(b) of the Act, for the 1998 taxation year.
16. He submits that the Appellant was not entitled to the Amount pursuant to section 118(5) of the Act for the 1998 taxation year.
[3] None of the assumptions were refuted.
[4] On page 2 of Exhibit R-2, the Appellant's May 21, 1998 agreement, it states "And Whereas this Agreement shall supersede all existing agreements which have been made between the parties;". This agreement was made after April, 1997 and varies the children's support payments by reducing them to $411.00 per month from January and including November 1, 1997. In these circumstances Section 56.1 of the Income Tax Act operates to make these payments non-deductible.
[5] The Appellant's claim for 1998 of an equivalent-to-spouse amount of $5,380 for Mathew is governed by subsection 118(5) of the Income Tax Act. For November and December, 1998 the Appellant was not required to pay a support amount to Mrs. Spirig respecting Mathew who was once again residing with the Appellant. The Appellant was living separate and apart from Mrs. Spirig because of a breakdown in their marriage.
[6] Subsection 118(5) of the Income Tax Act reads:
118(5) Support
No amount may be deducted under subsection (1) in computing an individual's tax payable under this Part for a taxation year in respect of a person where the individual is required to pay a support amount (as defined in subsection 56.1(4)) to the individual's spouse or former spouse in respect of the person and the individual
(a) lives separate and apart from the spouse or common-law partner or former spouse or common-law partner throughout the year because of the breakdown of their marriage or common-law partnership; or
(b) claims a deduction for the year because of section 60 in respect of a support amount paid to the spouse or common-law partner or former spouse or common-law partner.
Here the Appellant was living separate and apart from Mrs. Spirig throughout the year and was required to pay her a support amount respecting Mathew in that year. As a result subsection 118(5) forbids the Appellant's claim for the credit.
[7] The appeal is dismissed.
Signed at Ottawa, Canada, this 26th day of April, 2001.
"D. W. Beaubier"
J.T.C.C.