Date: 20020208
Docket: 2001-3471-IT-I
BETWEEN:
EVA SAMYCIA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Bowman, A.C.J.
[1] This is an appeal from an assessment for the appellant's 1999 taxation year. By that assessment the Minister of National Revenue included the amount of $10,671 received by the appellant from her former spouse. The amount was the total received by her as periodic support payments for the three children of the marriage of the appellant and her former spouse Jean-Marc Samycia.
[2] The facts are not in dispute. The appellant and her former spouse married in 1976. They separated a number of times but the final separation was in 1992 or 1993. They had four children, born in 1977, 1980, 1982 and 1987 respectively.
[3] Exhibit A-2 contains a number of interim orders. On January 5, 1994 Master Bolton of the Supreme Court of British Columbia ordered Jean-Marc Samycia the husband to pay interim maintenance of $450 per month for each of the four children commencing on January 1, 1994 and continuing on the first day of each and every month until further court order.
[4] The order read:
THIS COURT ORDERS that the Defendant shall pay to the Plaintiff for the interim maintenance of the four children of the marriage, namely:
QUINCY JAMES SAMYCIA, born July 1st, 1987;
SOPHIE-AIMEE SAMYCIA, born July 4th, 1982;
JACQUELINE-AIMEE SAMYCIA, born March 10th, 1980;
VIVIANNE-AIMEE SAMYCIA, born January 16th, 1977;
the sum of $450.00 per month per child commencing on the first day of January, 1994 and continuing on the first day of each and every month thereafter until further Court Order.
[5] The order of Master Bolton was appealed to Mr. Justice Meiklem of the Supreme Court of British Columbia. Mr. Justice Meiklem on August 2, 1994 allowed the appeal in the following terms.
THIS COURT ORDERS that the Appeal of the Defendant, JEAN-MARC SAMYCIA, aka Jean Marc SAMYCIA is allowed only to the extent of reducing the maintenance from $450.00 per month per child to $400.00 per month per child.
[6] The point that should be noted is that while Mr. Justice Meiklem reduced the monthly payment for each child to $400 the order still covered all four children.
[7] Finally, on September 26, 1997 a consent order between the appellant as plaintiff and her husband as defendant was issued by the Supreme Court of British Columbia and entered on September 29, 1997. The portions of the consent order that are relevant to this appeal read:
THIS COURT ORDERS that the Plaintiff shall have sole custody of the children of the marriage, namely: JACQUELINE-AIMEE SAMYCIA, born March 10th, 1980, SOPHIE-AIMEE SAMYCIA born July 4th, 1982 and QUINCY JAMES SAMYCIA, born July 1st, 1987 (hereinafter called the "Children of the Marriage").
...
AND THIS COURT FURTHER ORDERS that the Defendant shall pay to the Plaintiff for the maintenance and support of each Child of the Marriage the sum of $400.00 per month per Child, on the first day of each month from March 1st, 1997; until that Child:
a. marries;
b. dies;
c. becomes self-supporting; or
d. becomes 19 and is not attending a post secondary educational institution;
whichever shall first occur. Provided that if a Child attends a post-secondary educational institution as a full-time student, the Defendant shall continue to pay maintenance as aforesaid for that Child until that Child:
a. ceases to attend a post-secondary educational institution as a full-time student; or
b. achieves his or her first post-secondary degree;
whichever shall first occur.
AND THIS COURT FURTHER ORDERS that the payments made pursuant to the preceding paragraph hereof:
a. shall not be included in the Plaintiff's taxable income for the taxation years in which they are received; and
b. shall not be deducted by the Defendant for taxation purposes from the Defendant's income for those years.
[8] It is important to note that the consent order of September 26, 1997 refers to only three children and makes detailed provisions for the cessation of payments in respect of each child and for their continuance where the child attends a post-secondary educational institution. This is a significant alteration in the total amount and duration of the support amounts payment.
[9] The appellant included the amounts received in 1997 in her income for 1997. She did not include them in 1998 and she was not reassessed. I draw no inference from either her inclusion in 1997 or the CCRA's non-inclusion in 1998. It was no doubt an oversight in both cases.
[10] There is one finding of fact that may or may not be relevant but I will set it out in case there is an appeal. In 1997 the parties or their lawyers realized that there had been a change in the law that had hitherto prevailed with respect to the deduction/inclusion of maintenance payments and they intended to ensure by the consent order of September 26, 1997 that they would not be deductible by Mr. Samycia and not includible in income by Mrs. Samycia. Whether they succeeded in achieving this result is of course what this appeal is about.
[11] Paragraph 56(1)(b) of the Income Tax Act reads
56(1) Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year,
...
(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 of which is a support amount received after 1996 and before the end of the year by the taxpayer from a particular person where the taxpayer and the particular person were living separate and apart at the time the amount was received,
B is the total of all amounts each of which is a child support amount that became receivable by the taxpayer from the particular person under an agreement or order on or after its commencement day and before the end of the year in respect of a period that began on or after its commencement day, and
C is the total of all amounts each of which is a support amount received after 1996 by the taxpayer from the particular person and included in the taxpayer's income for a preceding taxation year.
[12] In this formula A is the amount of $10,671 received by the appellant in 1999. B is the amount received after the commencement day. On the appellant's interpretation the commencement day is September 26, 1997 and B should therefore be $10,671 so that the application of the formula would yield nil. C is zero on the interpretation of both parties. The respondent's position is that B is zero because there is no commencement day and accordingly the "old régime" as I described it in Kovarik v. R., [2001] 2 C.T.C. 2503, would continue to govern the tax treatment of the support payments.
[13] "Commencement day" is defined in subsection 56.1(4) as follows:
"commencement day" at any time of an agreement or order means
(a) where the agreement or order is made after April 1997, the day it is made; and
(b) where the agreement or order is made before May 1997, the day, if any, that is after April 1997 and is the earliest of
(i) the day specified as the commencement day of the agreement or order by the payer and recipient under the agreement or order in a joint election filed with the Minister in prescribed form and manner,
(ii) where the agreement or order is varied after April 1997 to change the child support, amounts payable to the recipient, the day on which the first payment of the varied amount is required to be made,
(iii) where a subsequent agreement or order is made after April 1997, the effect of which is to change the total child support amounts payable to the recipient by the payer, the commencement day of the first such subsequent agreement or order, and
(iv) the day specified in the agreement or order, or any variation thereof, as the commencement day of the agreement or order for the purposes of this Act.
[14] As I mentioned above the appellant's position is that "the agreement or order" is that of September 26, 1997 and that since it was made "after April, 1997" its commencement day is the day it was made.
[15] The respondent's position is that the "agreement or order" referred to in the definition of "commencement day" is the order of Mr. Justice Meiklem of August 2, 1994 and so since that day is not after April 1997 the words "if any" in the opening portion of paragraph (b) of the definition of commencement day require that I conclude that there is no commencement day.
[16] Obviously the "agreement or order" in the definition of commencement day must be the agreement or order under which the child support payments became receivable as contemplated by the component B in the formula in paragraph 56(1)(b).
[17] Counsel for the respondent argues that since the order of September 26, 1997 did not have the effect of changing the total child support amounts payable under the August 2, 1994 order, I cannot treat the September 26, 1997 order as "the agreement or order" because it did not change the provisions of the earlier order. The appellant argues that the "agreement or order" is that of August 2, 1994.
[18] The short answer is that it radically changed them. It effected the final resolution of all of the differences between the spouses. It entirely superseded the August 2, 1994 order and most importantly it changed the total child support payments payable to Mrs. Samycia by her spouse.
[19] This should be sufficient to dispose of the matter. However, out of deference to Mr. Caux' argument I shall set out the reasoning that was advanced because I am not persuaded that even if the September 26, 1997 order had not changed the total child support amounts from those payable under interim order of August 2, 1994 that a different conclusion would have been justified.
[20] Paragraph (a) of the definition by itself is perfectly clear:
(a) where the agreement or order is made after April 1997, the day it is made.
[21] These words are precisely applicable to the September 26, 1997 order, which is the order under which the payments were made. One need look no further.
[22] The respondent however argues that subparagraph (b)(iii) constitutes a derogation from (a) as follows: where there is an order or agreement made after April 1997 and it is preceded by another order or agreement made before May 1997 the "commencement day" is the day of the later order or agreement if and only if it changes the total of the child support amounts from those payable under the earlier order or agreement.
[23] Broadly, what the legislation seems to be seeking to achieve is this. If payments are being made under a pre-May 1997 order or agreement the old régime applies after April 1997 unless a new order or agreement is made after April 1997 that varies the total child support amounts payable.
[24] There may be some merit in this position if "the agreement or order" under which the payments are made is a pre-May 1997 agreement or order that acquires a commencement day by reason of a post-April 1997 variation of amounts. Where no such variation or change of the type contemplated by subparagraphs (b)(ii) or (iii) and the payment is made under a post-April 1997 order or agreement subparagraphs (b)(ii) and (iii) have no application and we are left solely with paragraph (a) to determine the commencement day.
[25] Either there was a variation or change as contemplated by subparagraphs (b)(ii) or (iii) or there was not, but on either hypothesis the commencement day is September 26, 1997.
[26] Obviously where there is a comprehensive order such as the September 26, 1997 order it supersedes the August 2, 1994 order and the September 26, 1997 order is the one under which the payments in 1999 are made. It is the commencement day of that order that is relevant and it is determined by paragraph (a) of the definition. Although the September 26, 1997 agreement has the effect of changing the total amounts payable under the August 2, 1994 agreement, it does not refer to the earlier order. It is a stand-alone order (cf. Kovarik, supra).
[27] Some brief reference was made to subparagraph (b)(i) and (iv) of the definition of commencement day. No joint election was filed and so subparagraph (i) does not apply. So far as subparagraph (iv) is concerned the order of September 26, 1997 does not in so many words specify a day, although it does purport to provide that the amounts payable under it are not deductible by the husband and not includible by the wife. One might argue that this implicitly specifies the date of the order as the commencement day. However in light of my conclusion above I need not consider this argument.
[28] Counsel for the respondent also argues that since the September 26, 1997 order purports to have retroactive effect to March 1 of 1997 this makes the provisions of subsection 56.1(3) applicable and therefore the commencement day is moved back to March 1, 1997. I do not think on the plain words of subsection 56.1(3) that that subsection has any application nor do I think that the reference in the agreement to March 1, 1997 moves the day on which the order was made back to that day.
[29] The appeal is allowed and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment to delete from the appellant's income for 1999 the support payments received by her in the amount of $10,671.
[30] The appellant is entitled to her costs, if any.
Signed at Toronto, Canada, this 8th day of February 2002.
|
"D.G.H. Bowman" |
A.C.J.
COURT FILE NO.: 2001-3471(IT)I
STYLE OF CAUSE: Between Eva Samycia and
Her Majesty the Queen
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: January 29, 2002
REASONS FOR JUDGMENT BY: The Honourable D.G.H. Bowman
Associate Chief Judge
DATE OF JUDGMENT: February 8, 2002
APPEARANCES:
For the Appellant: The Appellant herself
Marc Soprovich, CGA
Counsel for the Respondent: Victor Caux, Esq.
COUNSEL OF RECORD:
For the Appellant:
Name: --
Firm: --
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-3471(IT)I
BETWEEN:
EVA SAMYCIA
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on January 29, 2002 at Vancouver, British Columbia, by
The Honourable D.G.H. Bowman, Associate Chief Judge
Appearances
For the Appellant: The Appellant herself
Marc Soprovich, CGA
Counsel for the Respondent: Victor Caux, Esq.
JUDGMENT
It is ordered that the appeal from the assessment made under the Income Tax Act for the 1999 taxation year be allowed and the assessment be referred back to the Minister of National Revenue for reconsideration and reassessment to delete from the appellant's income for 1999 the support payments received by her in the amount of $10,671.
The appellant is entitled to her costs, if any.
Signed at Toronto, Canada, this 8th day of February 2002.
|
"D.G.H. Bowman" |
A.C.J.