BETWEEN:
and
____________________________________________________________________
Appeal dealt with by written submissions, by
The Honourable Justice Campbell J. Miller
Participants:
For the Appellant: The Appellant himself
Counsel for the Respondent: Justine Malone
____________________________________________________________________
JUDGMENT
The appeal from the assessment of tax made under the Income Tax Act for the 2000 taxation year is dismissed.
Signed at Ottawa, Canada, this 19th day of January 2007.
BETWEEN:
FRANK W. MERCER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
[1] This is an informal procedure appeal by Mr. Frank Mercer concerning his 2000 taxation year. He seeks to deduct support payments paid to his estranged spouse, Estephanie Mercer in 2000. The sole issue to be determined is whether the amounts paid by him to Ms. Mercer in 2000 are deductible as support payments. They are only deductible pursuant to section 60 of the Income Tax Act (the Act) provided they are not "child support amount", as defined in subsection 56.1(4) of the Act.
[2] Paragraph 60(b) reads:
60 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 and before the end of the year by the taxpayer to a particular person, where the taxpayer and the particular person were living separate and apart at the time the amount was paid,
B is the total of all amounts each of which is a child support amount that became payable by the taxpayer to 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 paid by the taxpayer to the particular person after 1996 and deductible in computing the taxpayer's income for a preceding taxation year;
Subsection 56.1(4) reads:
56.1(4) The definitions in this subsection apply in this section and section 56.
"child support amount" means any support amount that is not identified in the agreement or order under which it is receivable as being solely for the support of a recipient who is a spouse or common-law partner or former spouse or common-law partner of the payer or who is a parent of a child of whom the payer is a natural parent.
"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 common-law partner or former spouse or common-law partner of the payer, the recipient and payer are living separate and apart because of the breakdown of their marriage or common-law partnership 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.
[3] The law is therefore clear that, unless the support is identified in the Separation Agreement as being solely for the spouse, it will be considered a child support amount and therefore not deductible. These are the rules, and however unfair Mr. Mercer might believe them to be, it is not open to the Court to turn a blind eye to the legislation. The question simply is - does the Separation Agreement, pursuant to which Mr. Mercer made the payments, identify the payments as solely for the support of Ms. Mercer?
[4] Mr. and Ms. Mercer entered a Separation Agreement dated May 22, 1998. Paragraph 4 reads as follows:
4.01 The Husband and Wife have agreed that the Husband's income from pension cheques shall be divided between the parties in the proportions of two thirds to the Wife and one third to the husband and more specifically the Wife shall receive the full amount of the husband's Canadian Forces pension XXX, and the full amount of his Department of Finance pension described as #PENTCHRS XXX which together total approximately $1,500.
4.02 The provisions for support and maintenance herein are based on the present capability of the husband to provide support to the Wife and child of the marriage but since the expenses of the Wife without any allowance for the necessities of life approximately equal the amount hereby paid to her therefore should the Husband's circumstances improve so that he is capable of paying more than herein provided he shall report the same to the Wife but in any event if the Wife believes that the Husband can increase the maintenance herein provided she may request an increase in support from the Husband and failing agreement apply to the Court for an Order;
[5] Paragraph 4.02 is abundantly clear that the support is for the wife and child of the marriage. It is not solely for the wife. Further, both Mr. and Ms. Mercer in written representations to the Court, confirmed that the support included the child. The support does not, therefore, qualify for deduction pursuant to section 60, and the appeal must be dismissed.
[6] This file has had a lengthy and unfortunate history. Mr. Mercer, 80 years of age, lives in Indonesia, having left Canadaseveral years ago for health reasons. He has communicated with Canada Revenue Agency (CRA), Department of Justice and the Tax Court of Canada on an ongoing basis. He is an angry man. He is living on limited funds as a result, he believes, of having funds improperly taken away by the Government of Canada due to regular garnishment of his pension and the freezing of bank accounts; actions he maintains were taken while this appeal was in process. What I do not know, however, is whether the amounts sought by the Government relate to this file. Mr. Mercer has served this country as a member of Canada's Navy. He has served his community as a teacher. He is clearly reeling from what he perceives as a complete disregard of his contributions to Canada. He has made this point emphatically and consistently in his communications with the Court.
[7] Given the tenor of his communications and the obvious depth of his feelings, I would be misguided to think anything I can say can assuage the resentment he now feels towards his country. All I want Mr. Mercer to appreciate is that on this particular issue of the deductibility of support for the 2000 year, the law is clear, and the amount is not deductible. This finding is in no way whatsoever a degradation or slight on Mr. Mercer's impressive contributions to Canada; contributions that defended the right of a democracy to enact laws in the best interests of its citizens. It would be ironic indeed if I was to ignore those laws out of an abundance of compassion. I trust Mr. Mercer will understand that I cannot do that.
[8] The appeal is dismissed.
Signed at Ottawa, Canada, this 19th day of January 2007.
"Campbell J. Miller"
Miller J.
COURT FILE NO.: 2003-4477(IT)I
STYLE OF CAUSE: Frank W. Mercer and
Her Majesty The Queen
REASONS FOR JUDGMENT BY: The Honourable Justice Campbell J. Miller
DATE OF JUDGMENT: January 19, 2007
PARTICIPANTS:
|
For the Appellant: |
The Appellant himself |
|
Counsel for the Respondent: |
Justine Malone |
COUNSEL OF RECORD:
Firm:
For the Respondent: John H. Sims, Q.C.
Deputy Attorney General of Canada
Ottawa, Canada