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Docket: 2000-2091(IT)G |
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BETWEEN: |
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SUSAN CARMICHAEL, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
____________________________________________________________________
Appeals heard on August 26 and 27, 2002, at Toronto, Ontario,
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by: The Honourable Judge M.A. Mogan |
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Appearances: |
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Counsel for the Appellant: |
John David Buote |
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Counsel for the Respondent: |
Suzanne M. Bruce |
____________________________________________________________________
JUDGMENT
The appeals from assessments of tax made under the Income Tax Act for the 1995 and 1996 taxation years are dismissed, with costs.
Signed at Ottawa, Canada, this 30th day of May, 2003.
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"M.A. Mogan" |
J.T.C.C.
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Citation: 2003TCC379 |
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Date: 20030530 |
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Docket: 2000-2091(IT)G |
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BETWEEN: |
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SUSAN CARMICHAEL, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
REASONS FOR JUDGMENT
Mogan J.
[1] The Appellant and Trevor Johnson ("Trevor") were married on June 24, 1978 in the Province of Ontario. There were two children of the marriage: Stephanie (January 1984) and Derek (April 1987). In February 1995, the Appellant and Trevor separated, and they have since lived separate and apart at all relevant times. On May 2, 1995, Justice Hermiston of the Ontario Court (General Division) issued an Order (Exhibit A-1, Tab 1) upon a motion in which the Appellant was the "Petitioner" and Trevor was the "Respondent". The Order stated in part:
5. THIS COURT ORDERS THAT on an interim interim basis the Respondent husband shall pay to the Petitioner wife the sum of $1,400.00 per month per child commencing May 1, 1995 for a total support payment in the amount of $2,800.00 per month.
6. THIS COURT ORDERS THAT the Respondent husband is to pay on an interim interim basis all house expenses including the mortgage, insurance, utilities, cable, telephone, taxes and maintenance as an incident of spousal support, otherwise, this issue is adjourned pending cross-examination.
[2] Trevor made the child support payments under paragraph 5 of the Order and paid various house expenses under paragraph 6 of the Order. The issue in this appeal is whether the Appellant is required to include in computing her income for 1995 and 1996 the amounts paid by Trevor under paragraph 6 of the Order.
[3] When filing her income tax returns for 1995 and 1996, the Appellant reported as "alimony or maintenance income" the amounts of $21,000 and $34,000, respectively. See Exhibit R-1, Tabs 1 and 2. These amounts were received as child support under paragraph 5 of the Order (Exhibit A-1, Tab 1). When filing his income tax returns for 1995 and 1996, Trevor deducted as "alimony or maintenance paid" the amounts $29,605.82 and $45,555.70, respectively. See Exhibit R-1, Tabs 3 and 4. The differences between the amounts reported by the Appellant and the amounts deducted by Trevor are as follows:
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1995 |
1996
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Trevor deducted |
$29,605.82 |
$45,555.70 |
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Appellant reported |
21,000.00 |
34,000.00 |
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Difference |
$8,605.82 |
$11,555.70 |
The amounts shown as "Difference" in the above table are the house expenses paid by Trevor under paragraph 6 of the Order. By Notices of Reassessment dated March 19, 1998, the Minister of National Revenue added to the Appellant's reported income for 1995 and 1996 the amounts $8,605.82 and $11,555.70, respectively. The Appellant has appealed from those reassessments.
[4] At the commencement of the hearing, counsel for the Appellant and counsel for the Respondent filed with the Court two documents entitled "Revised Statement of Agreed Facts" and "Statement of Additional Agreed Facts". I will set out the content of those two documents.
Revised Statement of Agreed Facts
1. Amounts were paid by the Appellant's former spouse to third parties for house expenses, including the mortgage, insurance, utilities, cable, telephone, taxes and maintenance ("Amounts") as an incident of spousal support, pursuant to an Order of Mr. Justice Hermiston of the Ontario Court, General Division dated May 2, 1995 ("Order").
2. The Amounts paid total $8,605.82 in 1995 and $11,555.70 in 1996.
3. The Order does not provide that subsection 56.1(2) and subsection 60.1(2) was to apply to the Amounts.
4. The Appellant was living, in 1995 and 1996, separate and apart from her spouse who was required to make the payments at the time the payments were made and throughout the remainder of the year.
5. The Minister of National Revenue (the "Minister") reassessed the Appellant for 1995 and 1996 to add the amounts of $8,605.82 and $11,555.70 to the Appellant's 1995 and 1996 taxation years, respectively, by Notices of Reassessment dated March 19, 1998 and by Notice of Confirmation dated February 15, 2000.
Statement of Additional Agreed Facts
The following additional agreed facts are in addition to (and does not replace) the "Revised Statement of Agreed Facts" executed on August 20, 2002 by the Appellant and on August 21, 2002 by the Respondent.
1. All payments ordered pursuant to paragraph 6 of the Order of Justice Hermiston of the Ontario Court, General Division dated May 2, 1995 ("Order") are payments for the benefit of the Appellant within the meaning of paragraph 56.1(1)(b).
2. The Appellant acknowledges having received payments from her former spouse in respect of Bell Canada charges of $120.00 in 1995 and $553.76 in 1996.
[5] The provisions of the Income Tax Act referred to in the Revised Statement of Agreed Facts and Statement of Additional Agreed Facts plus other relevant provisions as they applied in 1995 and 1996 are set out below. For brevity and comprehension, I am omitting certain words which, in my view, are not relevant to the appeal herein. It is worth noting that paragraphs 56(1)(b) and (c) are parallel in structure to paragraphs 60(b) and (c).
56(1) Without restricting the generality of section 3, there shall be included in computing the income of a taxpayer for a taxation year,
(a) ...
(b) an amount received by the taxpayer in the year as alimony or other allowance payable on a periodic basis for the maintenance of the taxpayer, children of the taxpayer or both the taxpayer and the children if the taxpayer, because of the breakdown of the taxpayer's marriage, was living separate and apart from the spouse or former spouse who was required to make the payment at the time the payment was received and throughout the remainder of the year and the amount was received under a decree, order or judgment of a competent tribunal or under a written agreement;
(c) an amount received by the taxpayer in the year as an allowance payable on a periodic basis for the maintenance of the taxpayer, children of the taxpayer or both the taxpayer and the children if
(i) at the time the amount was received and throughout the remainder of the year the taxpayer was living separate and apart from the person who was required to make the payment,
(ii) the person who was required to make the payment is the natural parent of a child of the taxpayer, and
(iii) the amount was received under an order made by a competent tribunal in accordance with the laws of a province;
60 There may be deducted in computing a taxpayer's income for a taxation year such of the following amounts as are applicable:
(a) ...
(b) an amount paid by the taxpayer in the year as alimony or other allowance payable on a periodic basis for the maintenance of the recipient, children of the recipient or both the recipient and the children, if the taxpayer, because of the breakdown of the taxpayer's marriage, was living separate and apart from the spouse or former spouse to whom the taxpayer was required to make the payment at the time the payment was made and throughout the remainder of the year and the amount was paid under a decree, order or judgment of a competent tribunal or under a written agreement;
(c) an amount paid by the taxpayer in the year as an allowance payable on a periodic basis for the maintenance of the recipient, children of the recipient or both the recipient and the children, if
(i) at the time the amount was paid and throughout the remainder of the year the taxpayer was living separate and apart from the recipient,
(ii) the taxpayer is the natural parent of a child of the recipient, and
(iii) the amount was received under an order made by a competent tribunal in accordance with the laws of a province;
56(12) Subject to subsections 56.1(2) and 60.1(2), for the purposes of paragraphs (1)(b), (c) and (c.1) (in this subsection referred to as the "former paragraphs") and 60(b), (c) and (c.1) (in this subsection referred to as the "latter paragraphs"), "allowance" does not include any amount that is received by a person, referred to in the former paragraphs as "the taxpayer" and in the latter paragraphs as "the recipient", unless that person has discretion as to the use of the amount.
56.1(1) Where a decree, order, judgment or written agreement described in paragraph 56(1)(b) or (c), or any variation thereof, provides for the periodic payment of an amount
(a) to a taxpayer by a person who is
(i) the taxpayer's spouse or former spouse, or
(ii) where the amount is paid under an order made by a competent tribunal in accordance with the laws of a province, an individual of the opposite sex who is the natural parent of a child of the taxpayer, or
(b) for the benefit of the taxpayer, children in the custody of the taxpayer or both the taxpayer and those children,
the amount or any part thereof, when paid, shall be deemed for the purposes of paragraphs 56(1)(b) and (c) to have been paid to and received by the taxpayer.
56.1(2) For the purposes of paragraphs 56(1)(b) and (c), the amount determined by the formula
A - B
where
A is the total of all amounts each of which is an amount ... paid by a person in a taxation year, under a decree, order or judgment of a competent tribunal or under a written agreement, in respect of an expense ... incurred in the year ... for the maintenance of a taxpayer who is
(a) that person's spouse or former spouse, or
(b) where the amount is paid under an order made by a competent tribunal in accordance with the laws of a province, an individual of the opposite sex who is the natural parent of a child of the person,
or for the maintenance of children in the taxpayer's custody or both the taxpayer and those children if, at the time the expense was incurred and throughout the remainder of the year, the taxpayer was living separate and apart from that person, and
B is the amount ...
shall, where the decree, order, judgment or written agreement, as the case may be, provides that this subsection and subsection 60.1(2) shall apply to any payment made thereunder, be deemed to be an amount paid by that person and received by the taxpayer as an allowance payable on a periodic basis.
60.1(1) Where a decree, order, judgment or written agreement described in paragraph 60(b) or (c), or any variation thereof, provides for the periodic payment of an amount by a taxpayer
(a) to a person who is
(i) the taxpayer's spouse or former spouse, or
(ii) where the amount is paid under an order made by a competent tribunal in accordance with the laws of a province, an individual of the opposite sex who is the natural parent of a child of the taxpayer, or
(b) for the benefit of the person, children in the custody of the person or both the person and those children,
the amount or any part thereof, when paid, shall be deemed for the purpose of paragraphs 60(b) and (c) to have been paid to and received by that person.
60.1(2) For the purposes of paragraphs 60(b) and (c), the amount determined by the formula
A - B
where
A is the total of all amounts each of which is an amount ... paid by a taxpayer in a taxation year, under a decree, order or judgment of a competent tribunal or under a written agreement, in respect of an expense ... incurred in the year ... for maintenance of a person who is
(a) the taxpayer's spouse or former spouse, or
(b) where the amount is paid under an order made by a competent tribunal in accordance with the laws of a province, an individual of the opposite sex who is the natural parent of a child of the taxpayer,
or for the maintenance of children in the person's custody or both the person and those children if, at the time the expense was incurred and throughout the remainder of the year, the taxpayer was living separate and apart from that person, and
B is the amount ...
shall, where the decree, order, judgment or written agreement, as the case may be, provides that this subsection and subsection 56.1(2) shall apply to any payment made thereunder, be deemed to be an amount paid by the taxpayer and received by that person as an allowance payable on a periodic basis.
[6] The "Order" referred to in paragraphs 1 and 3 of the Revised Statement of Agreed Facts is the Order of Justice Hermiston (Exhibit A-1, Tab 1) which is quoted in part in paragraph 1 above. The parties have agreed that the Order does not provide that subsections 56.1(2) and 60.1(2) apply to amounts paid by Trevor to third parties under paragraph 6 of the Order. Even if the parties had not so agreed, it is apparent that the terms of the Order make no specific reference to subsections 56.1(2) and 60.1(2) and, indeed, make no specific reference to any income tax consequences resulting from any payments made by Trevor to the Appellant or to a third party. The Order is silent with respect to all income tax matters.
[7] There are recent cases in this Court and in the Federal Court of Appeal reviewing court orders and separation agreements which do, or do not, refer to subsections 56.1(2) and 60.1(2). An important condition in each of those two subsections is found in the operative words integrated with the "deeming" provision:
... where the decree, order, judgment or written agreement, as the case may be, provides that this subsection and ... shall apply to any payment made thereunder ...
[8] In The Queen v. Arsenault, 96 DTC 6131, the Federal Court of Appeal was divided on the question of whether the amounts in certain cheques, issued by a man and delivered to his wife (after they had separated) but payable to the wife's landlord, were deductible under paragraph 60(b) in computing the man's income. The majority held (in February 1996) that the amounts were deductible. In The Queen v. Armstrong, 96 DTC 6315, the Federal Court of Appeal considered a similar situation in which a man was attempting to deduct payments made for the benefit of his former wife. Stone J.A. writing for the Court stated at page 6319:
The view that subsection 60.1(2) applies can be dealt with shortly. In my view, the deeming provision employed by Parliament at the end of this subsection applies only "where the decree, order, judgment or written agreement ... provides that this subsection and section 56.1(2) shall apply to any payment made pursuant thereto". No such statutory language appears in either of the court orders. It follows, therefore, that subsection 60.1(2) can have no application in allowing the amounts to be deducted from the respondent's income.
The judgment in Armstrong, against the taxpayer, was delivered just three months after the judgment in Arsenault. In my view, the decision in Armstrong was based on subsection 60.1(2) whereas the decision in Arsenault was based on paragraph 60(b).
[9] In The Queen v. Larsson, 97 DTC 5425, the Federal Court of Appeal again considered a similar situation when McDonald J.A. stated:
... The case law has established that, generally speaking, where a recipient spouse does not have discretion as to the use of the support payments, those payments will not be considered to be an allowance: Queen v. Armstrong, 96 DTC 6315 (F.C.A.). Thus, directed support payments such as those made in this case will generally not be subject to the tax treatment outlined above, and will be taxed in the hands of the paying spouse.
One exception to this general principle was found where a spouse makes directed support payments pursuant to an agreement or court order. In this situation, the Income Tax Act specified that such payments shall be deemed to be an allowance for purposes of the Act where the agreement or court order specifically mentions subsections 60.1(2) and 56.1(2) of the Income Tax Act. If those sections are mentioned, the amount is deemed to be an allowance and is deductible by the payor spouse.
...
Subsection 60.1(2) goes on to allow for deductibility of certain amounts where the court order or support agreement makes specific mention of subsections 56.1(2) and 60.1(2). The one clear thread from all of this seems to be that to ensure deductibility of support payments, the order or agreement should mention subsections 56.1(2) and 60.1(2).
In Larsson, there were four court orders but only the fourth referred specifically to subsections 56.1(2) and 60.1(2). The Federal Court of Appeal concluded that the fourth court order was retroactive and so the amounts were deductible. The decision in Larsson, standing alone, is far-reaching because the Federal Court of Appeal stated that the court order or written agreement must specifically "mention" subsections 56.1(2) and 60.1(2). Subsequent cases have softened that result.
[10] In Pelchat v. The Queen, [1998] 1 C.T.C. 2741, the taxpayer and his former wife were divorced in 1989. The judge of the Quebec Superior Court who granted the divorce officially recognized a prior agreement whereby the taxpayer undertook to reimburse his former wife for certain household expenses like mortgage, property tax, insurance, heating and electricity. The divorce judgment contained a provision which stated:
As support, the petitioner shall pay the expenses set out below calculated on a monthly basis ... The said support shall be taxable in the hands of the respondent and tax deductible for the petitioner.
The Minister disallowed the deduction of the reimbursement amounts because the divorce judgment did not expressly provide that subsections 60.1(2) and 56.1(2) were to apply. Judge Archambault of this Court allowed the taxpayer (husband) appeal because the divorce judgment indicated that the parties clearly recognized that the amounts paid would be taxable in the hands of the wife and deductible in the hands of the husband.
[11] In Ferron v. The Queen, [2001] 3 C.T.C. 2072, Judge Archambault was again faced with circumstances similar to those in Pelchat. The support agreement between Daniel Ferron and his wife (Ms. Bernard) after they had separated did not mention subsections 56.1(2) and 60.1(2) but it was even more specific than Pelchat with respect to the tax consequences of amounts paid by Mr. Ferron to third parties. Paragraph 2.7 of the support agreement stated:
2.7 The payments made under paragraphs 2.1 to 2.6 above shall be taxable as income in Ms. Bernard's hands and may be deducted as support by Mr. Ferron.
Judge Archambault distinguished the more recent decision of the Federal Court of Appeal in Larsson and, following his prior decision in Pelchat, allowed the taxpayer (husband) appeal.
[12] In a more recent decision of the Federal Court of Appeal, Veilleux v. The Queen [2002] F.C.J. 737, Mr. Veilleux and his wife had divorced in December 1989. An agreement on corollary relief filed in the divorce proceeding was silent on the tax treatment of amounts paid by Mr. Veilleux to third parties for the benefit of his former wife. In March 1990, three months after the divorce, Mr. Veilleux and his former wife signed a supplementary agreement to provide for the tax treatment of amounts he paid to third parties but the agreement did not specifically mention subsections 56.1(2) and 60.1(2). The supplementary agreement did, however, contain the following paragraphs:
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[TRANSLATION] All amounts that Gaston Veilleux agrees to pay to Louise Ouellette are net of tax; accordingly, Gaston Veilleux agrees to pay any federal and provincial taxes that may be owed by Louise Ouellette arising from the payment of the said maintenance. |
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All amounts paid to Louise Ouellette or to third parties on her behalf shall be deemed to be part of the support; those amounts shall include the expenses relating to the family residence (i.e. mortgage payments, municipal and school taxes, home insurance, electricity, heating, maintenance and cable), expenses relating to the various family insurance plans (i.e. life insurance for dependants, survivor pension, hospitalization, medical expenses, paramedical expenses, dental insurance), provincial and federal income tax and any other amount that may be agreed on by the two parties (automobile repairs, children's activity fees, etc.). |
[13] The Federal Court of Appeal concluded that the two paragraphs quoted above showed that Mr. Veilleux and his former wife had agreed that she would include in her income any amounts he paid to third parties for her benefit; and that he would indemnify her with respect to any tax she might pay on such amounts. Létourneau J.A., writing for the Court, stated that he preferred the approach taken by Judge Archambault in Pelchat and Ferron; and he continued in paragraph 24:
24 ... an express reference to the numbers of subsections 56.1(2) and 60.1(2) is not required in the written agreement; it need only be apparent from the written agreement that the parties have understood the tax consequences of that agreement. A mere reference to the numbers of the subsections in the agreement is no better guarantee that the parties to the agreement understood their duties and their rights. On that point, stating and describing those duties and rights in the written agreement seems, in my view, to achieve Parliament's objective just as well as, if not better than, a mere magical reference to numbers of sections the substance of which is not stated in the agreement.
[14] The practical, common sense approach of the Federal Court of Appeal in Veilleux is attractive. There is a limitation, however, in the application of Veilleux because the support agreement or court order, if it does not contain a specific reference to subsections 56.1(2) and 60.1(2), must demonstrate from its terms that the parties understand the tax consequences of one party making certain payments. In other words, it must be apparent from the terms of the document that both parties understand that one party paying a particular amount will deduct that amount in computing income, and the other party will include that same amount in computing income. That, after all, is the practical effect of the "deeming" provision in subsections 56.1(2) and 60.1(2): "be deemed to be an amount paid ... and received ... as an allowance payable on a periodic basis".
[15] As stated in paragraph 6 above, the Order of Justice Hermiston (Exhibit A-1, Tab 1) is silent with respect to all income tax matters. Therefore, the Respondent may not draw any comfort from the fact that the Federal Court of Appeal appears to have moved from a strict rule in Larsson to a more flexible rule in Veilleux. I am satisfied that subsections 56.1(2) and 60.1(2) do not apply to payments made by Trevor under paragraph 6 of the Order of Justice Hermiston (Exhibit A-1, Tab 1) but paragraph 56(1)(b), standing alone, may apply to those payments.
[16] In paragraph 1 of the Statement of Additional Agreed Facts, the Appellant and Respondent have agreed that all payments made by Trevor pursuant to paragraph 6 of the Order of Justice Hermiston (Exhibit A-1, Tab 1) were payments for the benefit of the Appellant within the meaning of paragraph 56.1(1)(b) of the Act. Therefore, under subsection 56.1(1) such payments made by Trevor to third parties are deemed for the purpose of paragraph 56(1)(b) to have been paid to and received by the Appellant.
[17] In Hak v. The Queen, 99 DTC 36, the taxpayer and his wife had separated on January 2, 1995. On that date, they signed what appeared to be a "homemade" separation agreement which contained the following clause:
5. That Anwar Hak will provide $1000 per month for alimony and support, or
Pay apartment rent of $455.00/month
Utility bills of approximately $200.00/month
Health care premium
approximately $100.00/month
Total $750.00/month [sic]
and the remainder of $245/month for miscellaneous expenses for a total of $1,000 per month.
At trial, Mr. Hak proved by receipts from third parties that he had paid $8,151.24 under clause 5 during 1995 which was the only year under appeal. The Minister of National Revenue disallowed the deduction of any amounts paid by Mr. Hak to third parties under clause 5. When allowing the appeal by Mr. Hak, Bowman J. (as he then was) stated in paragraph 12:
... the spouses agreed to an arrangement whereby a portion of the $1,000 per month would be paid directly to the gas and utility companies and the balance would be paid to her. This method of payment was specifically set out in the agreement as an alternative to paying her directly the $1,000 per month. Although the agreement does not use the words "on behalf of Fazima Hak" or "for the benefit of Fazima Hak", this is plainly the intent and effect of the agreement and, in particular, paragraph 5 thereof. Without more, I should have thought it obvious that the appellant's making the payments on Fazima Hak's behalf and for her benefit would constitute constructive receipt by her and would be a payment by Mr. Hak of the type contemplated by paragraph 60(b).
[18] After setting out all of subsection 60.1(1), Bowman J. continued:
[14] It is not clear what paragraph 60.1(1)(b) added to what was already provided by the law of constructive receipt. It will be noted that the focus of subsection 60.1(1) is on the recipient, not the payor. It is the recipient who is deemed to have been paid and to have received the amount. It is possible that subsection 60.1(1) was inserted into the Act to ensure that the recipient could not avoid taxation on amounts paid to third parties on his or her behalf, on the basis that he or she did not "receive" them. It is interesting to note that paragraph 60(b) requires that the amount be paid as alimony or maintenance. It does not, in so many words, say to whom they have to be paid.
[17] It appears quite obvious that Fazima Hak had a discretion with respect to the entire $1,000, and she exercised that discretion by constituting her husband her agent to pay on her behalf certain expenses such as utility bills and rent. What Fazima Hak is saying in effect is "You are to pay me $1,000 per month. You can satisfy part of that obligation by paying some of my bills."
[31] I do not think that subsection 60.1(2) has any application. The payment of the rent and utility expenses was simply an alternative means, agreed to by the spouses, of satisfying a portion of the appellant's obligation to pay his spouse the periodic allowance of $1,000 per month. The failure to mention in the agreement that a provision that has no application in any event should apply to the payments cannot be fatal to deductibility under paragraph 60(b).
[37] ... Here we have payments that in my view, are covered by paragraph 60(b) and an agreement between the spouses that does no more than permit the appellant to fulfil in part his obligation to pay the periodic amount of $1,000 by paying certain bills that the wife would otherwise have to pay out of the $1,000 monthly allowance. In my view, this case is much more specifically covered by Arsenault. I cannot assume, in the absence of a clear indication to the contrary, that the Federal Court of Appeal in Armstrong intended to overrule its own decision of three months earlier in Arsenault. Indeed, this case is stronger than Arsenault. In Arsenault, the husband unilaterally presented his wife with cheques payable to third parties. In this case, the payments were made with the wife's express consent.
[19] This case really turns on the words of paragraph 6 of Justice Hermiston's Order. Although it is set out in paragraph 1 above, it is worth repeating here:
6. THIS COURT ORDERS THAT the Respondent husband is to pay on an interim interim basis all house expenses including the mortgage, insurance, utilities, cable, telephone, taxes and maintenance as an incident of spousal support, otherwise, this issue is adjourned pending cross-examination.
I will make two observations. First, the husband is to pay "all house expenses" which, by nature, tend to be periodic. Most of the expenses listed (mortgage, utilities, cable and telephone) are payable monthly or in alternate months. Other expenses like insurance, taxes and maintenance are payable more frequently than once a year. And second, the husband is required to pay all house expenses "as an incident of spousal support". Therefore, the payments by Trevor under paragraph 6 are both periodic and specifically for the support of the Appellant. As stated in paragraph 16 above, under subsection 56.1(1)(b), payments made by Trevor to third parties are deemed to have been paid to and received by the Appellant for the purpose of paragraph 56(1)(b).
[20] When the appeal of Arsenault (referred to in paragraph 8 above) was heard in this Court [1995] 2 C.T.C. 2168, Judge Brulé held that the wife had constructive receipt of the amounts in dispute; she had acquiesced in her former husband paying those amounts to her landlord; and she had effectively constituted the landlord as her agent for the purpose of receipt. Judge Brulé considered only paragraph 60(b) in allowing the deduction; and he was affirmed in the Federal Court of Appeal as described in paragraph 8 above. In my view, the decision of the Federal Court of Appeal in Arsenault was about paragraph 60(b) and not about subsection 60.1(2).
[21] Paragraph 56(1)(b) is parallel in structure to paragraph 60(b) and describes amounts received as alimony or other allowance payable on a periodic basis for maintenance. Those words describe the amounts which Trevor was required to pay to third parties under paragraph 6 of the Order and which, under subsection 56.1(1), the Appellant is deemed to have received. I will paraphrase Bowman J. from Hak (paragraph 17) by stating that the Appellant had a discretion with respect to the house expenses referred to in paragraph 6 of the Order; and she exercised that discretion by constituting her husband her agent to pay on her behalf all house expenses.
[22] The Appellant is required to include in the computation of her income for 1995 and 1996 the amounts of $8,605.82 and $11,555.70, respectively, as shown in paragraph 3 above. The appeals for 1995 and 1996 are dismissed, with costs.
Signed at Ottawa, Canada, this 30th day of May, 2003.
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"M.A. Mogan" |
J.T.C.C.
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CITATION: |
2003TCC379 |
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COURT FILE NO.: |
2000-2091(IT)G |
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STYLE OF CAUSE: |
Susan Carmichael and Her Majesty the Queen |
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PLACE OF HEARING: |
Toronto, Ontario |
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DATE OF HEARING: |
August 26 and 27, 2002 |
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REASONS FOR JUDGMENT BY: |
The Honourable Judge M.A. Mogan |
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DATE OF JUDGMENT: |
May 30, 2003 |
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APPEARANCES: |
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Counsel for the Appellant: |
John David Buote |
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Counsel for the Respondent: |
Suzanne M. Bruce |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
John David Buote |
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Firm: |
N/A |
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |