Docket: 2003-4392(IT)I

BETWEEN:

GEORGE CATTAN,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

____________________________________________________________________

Appeals heard on April 26, 2004 at Toronto, Ontario.

Before: The Honourable D.G.H. Bowman, Associate Chief Justice
Appearances:
For the Appellant:	The Appellant himself
Counsel for the Respondent:	Brent E. Cuddy

____________________________________________________________________

JUDGMENT

          It is ordered that the appeals from the assessments made under the Income Tax Act for the 2000 and 2001 taxation years are dismissed.

Signed at Ottawa, Canada, this 3rd day of May 2004.

"D.G.H. Bowman"

Bowman, A.C.J.

Citation: 2004TCC326

Date: 20040503

Docket: 2003-4392(IT)I

BETWEEN:

GEORGE CATTAN,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

REASONS FOR JUDGMENT

Bowman, A.C.J.

[1]      These appeals are from assessments made under the Income Tax Act for the appellant's 2000 and 2001 taxation years. They have to do with the appellant's claim to deduct child support payments paid by him to his ex-wife, Donna, in the amount of $21,000 and $18,000 in 2000 and 2001 respectively.

[2]      The appellant and his spouse separated and signed a Separation Agreement, dated April 24, 1997. They have two children, Christopher and Lyndsey, born in 1984 and 1986 respectively. Two provisions of the Separation Agreement are relevant here. Paragraphs 6(a) and 6(b) read:

6.       SPOUSAL SUPPORT

a)       The husband shall pay to the wife for her support the sum of $700.00 per month, commencing January 1st, 1997. The payments shall continue to and including December 1st, 1998. It is intended thereafter that the husband shall have no further obligation to the wife for her support. However, the parties agree that at the end of this period the matter will be reviewed between them. It is further agreed that there will be no extensions or variation to this paragraph, unless and until the wife has been able to provide satisfactory evidence to the husband that she has made all reasonable efforts to become self-sufficient, and is unable to do so.

b)       The husband and wife intend this Agreement to be final as to all claims related to spousal support, and hereby release all such claims arising out of their marriage. Both parties are aware and acknowledge that each of them may suffer or enjoy drastic, radical or catastrophic changes in their respective income, assets and debts, in the cost of living or their health, or changes of fortune by reason of unforseen factors, either related or unrelated to their marriage. Nevertheless, the husband and wife agree that under no circumstances will any change, direct or indirect, foreseen or unforseen, in the circumstances of either of them, give either of them the right to claim any alteration of the spousal support terms of this Agreement or any terms of spousal support contained in a Divorce Judgment between the parties. More particularly, each party acknowledges that he or she may be called during the rest of his or her life to use, either wholly or in part, his or her capital for his or her own support and each agrees to do so without any recourse to the other at any time. The wife specifically acknowledges that after December 31st, 1998, this Agreement shall stand as a barr to any claim she may have to future spousal support or alimony.

Clause 8 reads:

8.       CHILD SUPPORT

a)       The husband shall pay to the wife for the support of the children the sum of $1,150.00 per month, per child, commencing January 1st, 1997. The payments shall continue until one of the following occurs:

i)          the children no longer reside with the wife, provided that resides with includes being away from the wife's residence to attend an educational institution, to work for summer employment or to enjoy a reasonable holiday;

ii)        the children attain the age of 18 and cease to be in full-time attendance at a recognized educational facility;

iii)      the children complete their post-secondary school education;

iv)     the children marry or die.

c)       It is intended that the payments of support shall be included in the income of the wife for income tax purposes, and deducted by the husband for income tax purposes.

[3]      Notwithstanding the fact that the obligation to make spousal support payments ended on December 1, 1998, the appellant continued to make monthly payments of $200 for spousal support in 1999. Also, he continued to pay $1,150 per month for each child.

[4]      In December 1999, the appellant's son Christopher moved in with him.

[5]      On January 3, 2000, the appellant and his wife signed, in the presence of witnesses, an Amending Agreement. It read:

WHEREAS:

            The parties entered into a Separation Agreement dated April 24, 1997 (referred to as the "Separation Agreement") to settle the ownership and division of their property and their duties and obligation to one another arising from their marriage.

            The parties now desire to amend the Separation Agreement.

            NOW THEREFORE in consideration of the mutual covenants contained in this Agreement the parties agree as follows:

AMENDMENT

The Separation Agreement is hereby amended as follows:

(a)      Paragraph 7 of the Separation Agreement shall be amended as follows:

7.        CUSTODY AND ACCESS

   a)     The parties shall have joint custody of the children, whose primary residence shall be as follows; Christopher Jacob Adam Cattan shall reside with the husband, and Lyndsey Jenna Cattan, shall reside with the wife.

   b)     Both the husband and wife shall have generous and liberal access to the children, and will make those arrangements directly with the children.

(b)     Paragraph 8a of the Separation Agreement shall be amended as follows:

a)     The husband shall pay to the wife support for Lyndsey Jenna Cattan, the sum of $21,000 in the 2000, and $18,000 in the year 2001 and subsequent years.

                        CONTINUATION OF AGREEMENT

         The terms of the Separation Agreement as amended by this Agreement shall continue in full force and effect.

LEGAL ADVICE

The parties acknowledge that each:

(i)           has had independent legal advice

(ii)         understands the effect of the amendment of the Separation Agreement; and

(iii)       is signing this Agreement voluntarily.

[6]      The Agreement was simply an adaptation of an Agreement Mr. Cattan was given by a friend. Mr. Cattan was subsequently advised that he should not have signed the Agreement and that he should destroy it. Nonetheless, he gave it to the Canada Customs and Revenue Agency in support of an equivalent-to-spouse deduction, which he was in fact allowed.

[7]      I cannot ignore the existence of this Agreement. It was intended to create legal relations between the appellant and his ex-spouse. Although the spouses did not in fact have independent legal advice, I have to assume that they knew what they were signing.

[8]      The appellant contends that if I cannot ignore the Agreement completely, I should at least regard the $21,000 and $18,000 which he paid in 2000 and 2001 as consisting of two parts - $1,200 per month for Lyndsey (the indexed payment provided in the original Separation Agreement) and $550 per month in 2000 and $300 per month in 2001 - for spousal support.

[9]      That is unfortunately not what the Amending Agreement says. Arguably, if there had never been an Amending Agreement at least the amounts payable in respect of Lyndsey would have been deductible. However, on the face of the Amended Agreement there is a change in the child support and payments, and this creates a commencement day after April 1997 and renders all of the payments non-deductible by the appellant.

[10]     I shall not set out the provisions of subsection 56.1(4) of the Act which define "commencement day" and other terms. In Kovarick v. The Queen, [2001] 2 C.T.C. 2503, the new system relating to the deductibility of child support payments that came into effect following Thibaudeau v. Canada, [1995] 2 S.C.R. 627, was analysed. I need not repeat that analysis here. The Kovarick decision was given to Mr. Cattan by counsel for the respondent.

[11]     I have reached the conclusion reluctantly that the appeals must be dismissed. The terms of the Amending Agreement and of the legislation are clear.

[12]     The appeals are dismissed.

Signed at Ottawa, Canada, this 3rd day of May 2004.

"D.G.H. Bowman"

Bowman, A.C.J.

CITATION:

2004TCC326

COURT FILE NO.:

2003-4392(IT)I

STYLE OF CAUSE:

George Cattan and    Her Majesty The Queen

PLACE OF HEARING:

Toronto, Ontario

DATES OF HEARING:

April 26, 2004

REASONS FOR JUDGMENT BY:

The Honourable D.G.H. Bowman, Associate Chief Justice

DATE OF JUDGMENT AND REASONS FOR JUDGMENT:

May 3, 2004

APPEARANCES:

For the Appellant:

The Appellant himself

Counsel for the Respondent:

Brent E. Cuddy

COUNSEL OF RECORD:

For the Appellant:
	Name:
	Firm:

For the Respondent:

Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada