[OFFICIAL ENGLISH TRANSLATION]
1999-3855(IT)I
BETWEEN:
BERNARD MAYOR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on April 5, 2000, at Québec, Quebec, by
the Honourable Judge Alain Tardif
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Susan Shaughnessy
JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 1997 taxation year is dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 25th day of April 2000.
|
"Alain Tardif" |
J.T.C.C.
Translation certified true
on this 25th day of September 2003.
Sophie Debbané, Revisor
[OFFICIAL ENGLISH TRANSLATION]
Date: 20000425
Docket: 1999-3855(IT)I
BETWEEN:
BERNARD MAYOR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Tardif, J.T.C.C.
[1] This is an appeal for the 1997 taxation year.
[2] The point at issue is whether, for the 1997 taxation year, the Minister correctly revised to $11,853 the amount claimed by the appellant as support or other periodic payment.
[3] The appellant was the only person to testify in support of his appeal. His testimony consisted in reading the content of a letter dated February 23, 1999, addressed to the Head of the Appeal Division.
[4] I think the content of that letter is worth reproducing (Exhibit A-1):
[TRANSLATION]
. . .
I hereby wish to dispute strongly the manner in which I have been taxed with respect to the support I am paying to my separated spouse.
It was agreed, by "written agreement" made by a CLSC conciliator (government employee) whom I consulted, that I would pay Violette Mayor-Perrin half of my C.A.R.R.A. pension in the form of support. To summarize, I pay income tax at source on the total amount of the pension, then, in my income tax return, I report the total amount paid as support (signed receipts in your possession). THIS IS CLEAR AND CONCISE, and this concerns you.
Following this first point of the "agreement", reference is made to the way in which S.S.Q. insurance premiums, which are withheld by C.A.R.R.A. for all retirees before the net amount of the pension is paid, are paid and shared. These subsequent agreements have no bearing in your estimation and need not influence the income tax and deductions. By what right do you interpret a separation agreement, regardless of whether it has been well or poorly drafted . . . while you are at it, why not deduct the rent and the grocery bill?
I find the manner in which I have been treated by the federal tax authorities utterly unfair and arbitrary, and I ask you to revise this way of doing things.
Briefly stated, I received $33,068.04 less income tax deducted at source by C.A.R.R.A. I paid a total of $13,187.28 in support, plus an amount of $3,169.93, which was a refund of the income tax I had withheld from the 1996 support (see letter from Yvon Lavoie dated September 2, 1997).
All the supporting documents are in your possession.
Furthermore, last December 30, you prepared a notice of reassessment in the amount of $716.38, stating that, if I paid the amount owed within 20 days following the date of the notice, no additional interest would be charged to me as of that date. To this day, February 23, 1999, I have not paid because I am contesting that notice. Today, I have received a statement dated February 9, thus 40 days later, in the amount of $838.39. At these usurious rates, this is worse than a finance company. Please explain.
In any case, I will never be able to pay you this amount. I am just getting by with what I have left of my pension, and, at the age of 70, I will definitely not be going to work to pay an unfair and incomprehensible tax. All my life, I paid what I owed, including all income tax; that may be why I have no other prospect than my retirement pension, which I share honestly, honouring my signature.
Hoping that logic will prevail over every other consideration, I thank you in advance for your attention to my objection.
Yours sincerely,
B. Mayor
[5] The terms and conditions of the support at issue in this case were established by an agreement dated January 1, 1996, (Exhibit I-1) under the heading:
[TRANSLATION]
FINANCIAL RESPONSIBILITIES
. . .
8. The joint applicant Mayor shall continue to pay the joint applicant Mayor-Perrin, for her benefit, the sum of $140.00 a week for as long as she has no housing, telephone or food expenses;
9. The joint applicant Mayor shall pay the joint applicant Mayor-Perrin the sum of $350 a week from the moment she begins to reside in her dwelling and until she has begun to receive half of the pension funds available to the joint applicant Mayor. As soon as he has retired, the joint applicant Mayor shall pay the joint applicant Mayor-Perrin, as monthly support, her half of each payment made to him by CARRA from his pension fund, less the monthly life and health insurance policy premiums and taxes;
. . .
[6] The appellant explained that, at his former spouse's request and for greater consistency, he had entrusted matters to the same accountant since each of them was receiving income from a single source, that is to say, a retirement pension paid by the Commission administrative des régimes de la retraite et d'assurances (C.A.R.R.A.). The appellant stated that, at the request of his new accountant, he had refunded an amount of $3,169.93 to his former spouse, which amount he had deducted from his income as support for his 1997 taxation year.
[7] Believing that it was a tax refund to which the appellant's former spouse was entitled, the Court tried to determine the reason for this payment that the appellant made to his former spouse at the request of the joint accountant.
[8] The evidence on this issue was very confusing and did not clarify the matter. As to the other amounts, that is the payments for life insurance and health insurance premiums and applicable taxes, the whole totalling $111.19 a month, for an annual total, according to Exhibit I-3, of $1,223.09 (11 months), I believe the agreement is clear on this point. It provides as follows (Exhibit I-1):
[TRANSLATION]
9. . . . the joint applicant Mayor shall pay the joint applicant Mayor-Perrin, as monthly support, her half of each payment made to him by CARRA from his pension fund, less the monthly life and health insurance policy premiums and taxes . . .
[9] The appellant strongly deplored the rigidity of the tax provisions under which the Minister questions the nature of certain payments.
[10] On this point, I must recall that the respondent's mission is to ensure compliance with all the provisions of the Income Tax Act (the "Act").
[11] Over the years, the courts have defined, clarified and explained the various requirements and conditions respecting the taxation or deduction of support payments made or received.
[12] Consequently, the parties to a support agreement have all the appropriate and relevant information enabling them to know the financial and tax consequences at the time the agreement is signed.
[13] Thus it is easier to state in an agreement the intention of the parties as to the tax effects of that agreement. Should the effects not be consistent with the parties' intentions, the interested parties may always correct or amend the first agreement and may even make provision for the unforeseen adjustments of a Revenue Canada decision resulting from the first agreement.
[14] In the instant case, the appellant argued that the respondent should have allowed the deduction claimed simply because he had paid the amount to his former spouse. As for the amounts paid for insurance, he contended that they were amounts that benefited his former spouse as much as they did him, concluding that they were a component of the support.
[15] Subscribing to the interpretation put forward by the appellant would result in making it extremely difficult to administer the provisions of the Act relating to support. Inconsistency and arbitrariness would soon be ubiquitous.
[16] Parliament has enacted provisions, which have subsequently been clarified by case law, that enable taxpayers and the courts to foresee the tax consequences of amounts paid as a result of the break-up of a relationship.
[17] Where the terms of an agreement or judgment appear not to meet the expectations or intentions of the parties concerned by the agreement or judgment, those parties may always take the necessary steps to submit an agreement consistent with their intentions to the Minister of National Revenue or to return to Court to have the ruling obtained revised.
[18] In the instant case, the amounts the appellant would like to deduct as support were not defined as such in the support agreement.
[19] As to the amount of $3,169.93, the evidence was incomplete. The Court understood that the appellant had in a way provided the appellant Mayor-Perrin with, as it were, an early refund of an income tax overpayment. If that were the case, the appellant could not deduct that amount from his income since it was not an amount paid as support.
[20] Furthermore, assuming that it was an early tax refund, the appellant should normally have been reimbursed by his former spouse. I think it is important to remind the appellant that amounts paid as support are generally deductible for the payer; however, those payments are taxable in the hands of the recipient.
[21] In light of the evidence adduced by the appellant, the Court cannot allow his appeal, which is therefore dismissed.
Signed at Ottawa, Canada this 25th day of April 2000.
|
"Alain Tardif" |
J.T.C.C.
Translation certified true
on this 25th day of September 2003.
Sophie Debbané, Revisor