Date: 20010822
Docket: 2001-1123-IT-I
BETWEEN:
JOHN SKORY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Miller, J.T.C.C.
[1] The Appellant, John Skory, appeals the Minister's reassessments for 1997 and 1998 by way of Informal Procedure. The Minister is denying Mr. Skory's claim for a deduction for support amounts paid by Mr. Skory in 1997 and 1998 on the basis that his former partner was not a spouse within the meaning of the Income Tax Act ("Act"), and the payments were not made pursuant to an order of a competent tribunal.
[2] The facts are not in dispute. Mr. Skory and Jacqueline Rosemin lived together in a common-law relationship from 1982 to February, 1990 when they separated. They were never married with a marriage certificate or license. They had two children from this common-law relationship, Timothy (born August 16, 1985) and Kimberly-Ann (born April 13, 1988). They entered into a written agreement on July 17, 1991 which provided for support payments. Pursuant to this agreement, Mr. Skory made payments directly to Ms. Rosemin until 1997. On January 14, 1997 Mr. Skory was advised by way of letter from the Family Support Plan of Ontario that his agreement had been filed with the Office of the Director of the Family Support Plan and further payments should be sent to the Director. This Mr. Skory did throughout 1997 and 1998.
[3] Mr. Skory obtained from the Provincial Division of the Ontario Court at Newmarket an Affidavit in support of filing a domestic contract. Mr. Skory presumed that this meant his agreement had become a court order.
[4] The Appellant's sole argument was that the filing of the 1991 agreement in 1997 requiring payment to be made to the Director of the Family Support Plan was tantamount to replacing the agreement with an order requiring payment. The issue as put by Mr. Skory is whether payments made after that were made pursuant to the agreement or pursuant to an order of a competent tribunal in accordance with the laws of a province.
[5] Paragraph 60(b) reads:
There may be deducted in computing a taxpayer's income for a taxation year such of the following amounts as are applicable:
...
(b) the total of all amounts each of which is an amount determined by the formula
A - (B+C)
where
A is the total of all amounts each of which is a support
amount paid after 1996 ...
[6] Subsection 56.1(4) defines support amount as follows:
"support amount" means an amount payable or receivable as an allowance on a periodic basis for the maintenance of the recipient, children of the recipient or both the recipient and children of the recipient, if the recipient has discretion as to the use of the amount, and
(a) the recipient is the spouse or former spouse of the payer, the recipient and payer are living separate and apart because of the breakdown of their marriage and the amount is receivable under an order of a competent tribunal or under a written agreement; or
(b) the payer is a natural parent of a child of the recipient and the amount is receivable under an order made by a competent tribunal in accordance with the laws of a province.
[7] The filing of the agreement and confirmation by the Director of the Family Support Plan of such filing, combined with a request to Mr. Skory to make payments to the Director falls well short of an order of a competent tribunal. There is no evidence of any actual order. The letter from the Family Support Plan confirms the support requirements of the 1991 agreement and stipulates payments under the agreement will be monitored and enforced. The payments are not made pursuant to any order but continued to be made pursuant to the agreement.
[8] Mr. Skory did not argue that he might be eligible for deduction pursuant to paragraph (a) of the definition of support amount in subsection 56.1(4), based on being a spouse in accordance with the definition found in subsection 252(4). He accepted that the law recognizing common-law relationships did not come into effect until 1993 and presumed he simply did not qualify. Crown counsel however did ably explore this avenue and I therefore wish to address it. In the recent case of Girard v. The Queen, (no cite yet) I dealt with a similar issue. In Girard, the separation agreement was entered into after 1992, though the common-law relationship ceased prior to 1993. Mr. Girard and his common-law spouse entered the agreement on the understanding that Mr. Girard would be eligible for the deduction. I was satisfied in the circumstances that subsection 252(4) applied to deem Mr. Girard to have been in a marriage, notwithstanding the common-law relationship was over before 1993.
[9] The argument from the Respondent's counsel in denying the deductibility of Mr. Skory's payments explored in much greater detail the implementation of both paragraph 60(b) and subsection 252(4) in May, 1994. The Income Tax Amendments Revisions Act ("Revisions"), assented to on May 12, 1994, introduced amendments to section 60 and also introduced subsection 252(4). Crown counsel raised the introduction of paragraph 60(b) to illustrate the intention of the legislators at the time, not so much for the contents of the section itself, as the section was significantly amended prior to 1997 and 1998, the years in question.
[10] Subsection 20(1) of the Revisions contains the amended paragraph 60(b). Subsection 20(11) of the Revisions reads:
Subsection (1) applies to amounts received under a decree, order or judgment of a competent tribunal or under a written agreement, with respect to a breakdown of a marriage occurring after 1992.
This is clear. The amended paragraph 60(b) as it was then, did not apply to a marriage breakdown occurring before 1993. I compare this wording to the introduction of subsection 252(4) (found in subsection 140(3) of the Revisions), which reads:
(4) In this Act,
(a) words referring to a spouse at any time of a taxpayer include the person of the opposite sex who cohabits at that time with the taxpayer in a conjugal relationship and
(i) has so cohabited with the taxpayer throughout a 12-month period ending before that time, or
(ii) is a parent of a child of whom the taxpayer is a parent
and, for the purposes of this paragraph, where at any time the taxpayer and the person cohabit in a conjugal relationship, they shall, at any particular time after that time, be deemed to be cohabiting in a conjugal relationship unless they were not cohabiting at the particular time for a period of at least 90 days that includes the particular time because of a breakdown of their conjugal relationship;
(b) references to marriage shall be read as if a conjugal relationship between 2 individuals who are, because of paragraph (a), spouses of each other were a marriage;
(c) provisions that apply to a person who is married apply to a person who is, because of paragraph (a), a spouse of a taxpayer; and
(d) provisions that apply to a person who is unmarried do not apply to a person who is, because of paragraph (a), a spouse of a taxpayer.
[11] Unlike the amended paragraph 60(b) which was further amended, subsection 252(4) remained in force in such terms during 1997 and 1998, only being repealed in 2000. Subsection 140(4) of the Revisions stipulates:
Subsections 1 and 3 apply after 1992.
This is not clear. As I indicated in Girard:
The interpretation put on the timing of the applicability of section 252(4) is either:
1. For taxation years after 1992 I am to interpret "spouse" in accordance with section 252(4); or
2. I am to interpret "spouse" in accordance with section 252(4) for only those conjugal relationships existing after 1992.
[12] Counsel for the Respondent also pointed out subsection 140(5) of the Revisions:
Subsection (2) applies to the 1991 and subsequent taxation years.
He suggested that use of the term "subsequent taxation years", in subsection 140(5) and not in 140(4), helps define the interpretation I should put on subsection 140(4). I am not satisfied it does.
[13] Before leaving the subject of the introduction of legislation, I turn to the Income Tax Budget Amendments Act (the "Amendments") assented to April 25, 1997. This was the legislation which introduced paragraph 60(b) as it applies to 1997 and 1998. Subsection 10(1) sets out the new paragraph 60(b) and subsection 10(2) states:
Subsection (1) applies to amounts received after 1996.
This too is clear.
[14] Subsection 9(6) of the Amendments introduced the definition of support amount. Subsection 9(8) of the Amendments reads as follows:
Subsection (6) applies after 1996 except that a support amount, as defined in subsection 56.1 of the Act, as enacted by subsection (6) does not include an amount, that if paid and received, would, but for this Act, not be included in computing the income of the recipient of the amount.
[15] While the legislators must have intended this to be clear, I find the use of quadruple negatives convoluted. In interpreting this provision I first look to subsection 56.1(4) to determine if Mr. Skory's payments fall within the definition of support amount, and relying on the interpretation of the applicability of subsection 252(4) as determined in Girard, I can readily reach the decision that they do. Then I must ask that if I ignore "this Act", which must mean the Amendments Act and not the Income Tax Act, how would Mr. Skory's payments be treated by Ms. Rosemin. If they would not be included in her income, then they are not support amounts. Mr. Skory acknowledged that prior to 1997 he did not deduct payments, nor did Ms. Rosemin include them in income. However, could he have been deducting them? There is no question that prior to 1993 he was not in a position to have deducted the payments. Were the changes to paragraph 60(b) and the introduction of subsection 252(4) sufficient to make Mr. Skory's payments commencing in 1993 deductible? No, because paragraph 60(b), at that time, as already mentioned, clearly referred to a breakdown of marriage after 1992. The breakdown in this case occurred before 1992. Mr. Skory was not therefore entitled from 1993 to 1997 to deduct payments. Therefore the amounts in 1997 and 1998 received by Ms. Rosemin would not be included in computing her income. Consequently, these payments are excepted out of the definition of support amount in accordance with subsection 9(8) of the Amendments. Mr. Skory's payments therefore do not qualify for deduction in 1997 and 1998. I dismiss his appeal.
Signed at Ottawa, Canada, this 22nd day of August, 2001.
"Campbell J. Miller"
J.T.C.C.
COURT FILE NO.: 2001-1123(IT)I
STYLE OF CAUSE: John Skory v. The Queen
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: August 1, 2001
REASONS FOR JUDGMENT BY: The Honourable Campbell J. Miller
DATE OF JUDGMENT: August 22, 2001
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: James Gorham
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-1123(IT)I
BETWEEN:
JOHN SKORY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on August 1, 2001 at Toronto, Ontario by
the Honourable Judge Campbell J. Miller
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: James Gorham
JUDGMENT
The appeals from the reassessments made under the Income Tax Act for the 1997 and 1998 taxation years are dismissed, in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 22nd day of August, 2001.
|
"Campbell J. Miller" |
J.T.C.C.