[OFFICIAL ENGLISH TRANSLATION]
2000-1170(IT)I
1999-4762(IT)I
98-3850(IT)I
BETWEEN:
GILLES G. BEAUPRÉ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on common evidence
on September 6, 2001, at Sherbrooke, Quebec, by
the Honourable Judge Louise Lamarre Proulx
Appearances
Counsel for the Appellant: Robert Jodoin
Counsel for the Respondent : Marie-Aimée Cantin
JUDGMENT
The appeals from the assessments made under the Income Tax Act for the 1995, 1996, 1997 and 1998 taxation years are dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 30th day of October 2001.
|
"Louise Lamarre Proulx" |
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Date: 20011030
Docket: 2000-1170(IT)I
1999-4762(IT)I
98-3850(IT)I
BETWEEN:
GILLES G. BEAUPRÉ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Lamarre Proulx, J.T.C.C.
[1] These appeals, which were heard on common evidence, concern the appellant's 1995 to 1998 taxation years.
[2] The issue is whether the amounts paid by the appellant to his child's mother, to whom he was not married, in accordance with a judgment dated November 27, 1984, may be deducted by the appellant under the provisions relating to the deduction of support in the Income Tax Act (the "Act").
[3] The facts on which the Minister of National Revenue (the "Minister") relied are admitted and are, to all intents and purposes, identical for the taxation years in issue:
(1) The appellant and Agathe Forget were de facto spouses until 1979. A daughter named Amélie was born of their union.
(2) A judgment rendered on November 27, 1984, awarded the mother custody of Amélie. Under the same judgment, the appellant is required to pay his former de facto spouse a weekly amount of $75 for his child. This support is indexed on every anniversary date of the judgment.
(3) During the taxation years in issue, the appellant lived separate and apart from Ms. Forget.
[4] For 1995 and 1996, the Minister disallowed the deduction of the amounts paid by the appellant as support or other allowance payable on a periodic basis because the parties had not made a joint election in writing providing that the said amounts would be governed by paragraphs 56(1)(c.1) and 60(c.1) of the Act.
[5] For 1997 and 1998, the Minister disallowed the deduction of the amounts claimed because the parties had not made a joint election in writing providing that the said amounts would be governed by subsection 56.1(2) (formerly paragraph 56(1)(c.1)) and subsection 60.1(2) (formerly paragraph 60(c.1)) of the Act. It will be seen below that these are not the relevant sections.
Analysis
[6] For the purposes of the analysis of this case, it is necessary to look at the history of the relevant provision. Paragraph 60(c.1) of the Act was added by S.C. 1980-81-82-83, c. 140, s. 28(2):
28(2) Paragraph 60(c) of the said Act is repealed and the following substituted therefor:
"(c) an amount paid by the taxpayer in the year, pursuant to an order of a competent tribunal, as an allowance payable on a periodic basis for the maintenance of the recipient thereof, children of the recipient, or both the recipient and children of the recipient if, at the time the payment was made and throughout the remainder of the year, he was living apart from his spouse to whom he was required to make the payment;
(c.1) an amount paid by the taxpayer in the year, pursuant to an order made in accordance with the laws of a province by a competent tribunal, as an allowance payable on a periodic basis for the maintenance of the recipient thereof, children of the recipient, or both the recipient and children of the recipient if, at the time the payment was made and throughout the remainder of the year, he was living apart from the recipient who was an individual within a prescribed class of persons described in the laws of the province;"
[7] Subsection 28(2) was brought into force in accordance with subsection 28(13) of the same amending statute, which reads as follows:
(13) Subsection (2) is applicable with respect to payments made
(a) in the case of an order made after December 11, 1979, after that date; and
(b) in any other case where the taxpayer and the recipient agree in writing at any time in a taxation year, in the year and subsequent taxation years.
[8] Paragraph 60(c) of the Act (above) did not apply to the appellant because he was not married. Paragraph 60(c.1) applied in the case of unmarried persons, except that the recipient had to be an individual within a prescribed class of persons described in the laws of the beneficiary's province of residence. Ontario alone had such legislation.
[9] Paragraph 60(c.1) was amended in 1988 by S.C. 1988, c. 55, s. 37(1), as follows:
37(1) Paragraph 60(c.1) of the said Act is repealed and the following substituted therefor:
"(c.1) an amount paid by the taxpayer in the year, pursuant to an order made by a competent tribunal in accordance with the laws of a province, as an allowance payable on a periodic basis for the maintenance of the recipient thereof, children of the recipient, or both the recipient and children of the recipient if
(i) the order was made
(A) after February 10, 1988, or
(B) before February 11, 1988 and the taxpayer and the recipient jointly elected before the end of the year to have this paragraph and paragraph 56(1)(c.1) apply with respect to the payment,
(ii) at the time the payment was made and throughout the remainder of the year, the taxpayer was living apart from the recipient, and
(iii) the taxpayer required to pay the amount is an individual of the opposite sex who
(A) before the date of the order cohabited with the recipient in a conjugal relationship, or
(B) is the natural parent of a child of the recipient;"
[10] That amendment eliminated the requirement of belonging to a prescribed class of persons described in the laws of a province. Its application was general for orders made after February 10, 1988. However, in the case of orders made before February 11, 1988, the taxpayer and the beneficiary had to make, or to have made, a joint election in writing to have paragraph 60(c.1) and paragraph 56(1)(c.1) apply to the payment.
[11] Paragraph 60(c.1) of the Act was amended again in 1993, the year in which the notion of common law spouse was included in that of spouse. Subsection 20(2) of Schedule VIII to An Act to revise certain income tax law amendments in terms of the revised Income Tax Act and Income Tax Application Rules, S.C. 1994, c. 7, replaced paragraph 60(c.1) with paragraph 60(c). Subsection 20(2) reads as follows:
20(2) Paragraph 60(c.1) of the Act is replaced by the following:
. . .
(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;
[12] Subsection 20(12) of the same amending statute reads as follows:
20(12) Subsection (2) applies to orders made after 1992.
[13] Paragraph 60(c.1) still applies to orders made prior to 1993. It has been repealed solely in respect of orders made after 1992. Otherwise, under the new paragraph 60(c) of the Act, the appellant would be entitled to claim a deduction in respect of the support he paid in 1995 and 1996. However, since that provision applies only to orders made after 1992, the former paragraph 60(c.1) continues to apply to those made prior to 1993.
[14] The appeals must therefore be dismissed in respect of 1995 and 1996. I have previously considered this question in Gagné v. Canada, [2001] T.C.J. No. 304 (Q.L.). Must the appeals for 1997 and 1998 also be dismissed?
[15] Paragraphs 60(b) and (c) of the Act were replaced in 1996 by means of subsection 10(1) of the Income Tax Budget Amendments Act, 1996 ("Budget Amendments Act, 1996"), S.C. 1997, c. 25, which reads as follows:
10(1) Paragraphs 60(b) and (c) of the Act are replaced by the following:
(b) support - 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 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;
[16] That provision was brought into effect in accordance with subsection 10(2) of that same amending statute, which reads as follows:
10(2) Subsection (1) applies to amounts received after 1996.
[17] The terms used in paragraph 60(b), and in particular the words "support amount", are defined in subsection 56.1(4) of the Act, which was added by subsection 9(6) of the Budget Amendments Act, 1996, which reads as follows:
9(6) Section 56.1 of the Act is amended by adding the following after subsection (3):
(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 former spouse of the payer or who is a parent of a child of whom the payer is a natural parent.
"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.
"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 former spouse of the payer, the recipient and payer are living separate and apart because of the breakdown of their marriage and the amount is receivable under an order of 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.
[18] The provisions regarding the application of subsection 9(6), which are found in subsection 9(8) of the same Act, state that the meaning of "support amount" does not include an amount that was not previously included:
9(8) Subsection (6) applies after 1996, except that a support amount, as defined in subsection 56.1(4) of the Act, as enacted by subsection (6), does not include an amount that if paid and received would, but for this Act, not be included in computing the income of the recipient of the amount.
[19] These provisions were amended by S.C. 1998, c. 19, s. 307(1), to read as follows:
9(8) Subsection (6) applies after 1996, except that
(a) a support amount, as defined in subsection 56.1(4) of the Act, as enacted by subsection (6), does not include an amount
(i) that was received under a decree, order or judgment of a competent tribunal, or under a written agreement, that does not have a commencement day (within the meaning assigned by that subsection 56.1(4)), and
(ii) that if paid and received would, but for this Act, not be included in computing the income of the recipient of the amount; and
(b) . . .
[20] But for the provisions respecting application referred to in paragraphs [18] and [19] of these reasons, paragraph 60(b) and subsection 56.1(4) of the Act would apply to the amounts in issue for the 1997 and 1998 taxation years.
[21] In the Reply it was submitted that the appellant was not entitled to deduct as support payable on a periodic basis the payments made during the 1997 and 1998 taxation years to Ms. Forget for the maintenance of Amélie, because the parties did not jointly elect in writing to have subsections 60.1(2) and 56.1(2), which, it was asserted, replace the former paragraphs 56(1)(c.1) and 60(c.1), apply to the amounts paid. This submission is without foundation.
[22] Subsection 60.1(2) expands the scope of paragraph 60(b) by providing that certain expenses incurred for the maintenance of a person, children in that person's custody, or both that person and the children are deemed to be amounts payable by the taxpayer to that person and receivable by that person as an allowance on a periodic basis. The expenditures to which that provision applies are payments to third parties and often take the form of direct payments, in particular for medical, education, mortgage and rental expenses. They are not support payments as such.
[23] In one of his notices of appeal, the appellant raised the matter of the unconstitutionality of the provisions denying an unmarried parent the benefit of the deduction for support payments. Counsel for the respondent referred to Bergman v. Canada, [1993] F.C.J. No. 1429 (Q.L.), a case in which the Federal Court of Appeal held those provisions not to be discriminatory.
[24] The appeals are dismissed on the grounds that, in the circumstances described above, the deduction of support payments is not permitted under the relevant statutory provisions and that those provisions are constitutional.
Signed at Ottawa, Canada, this 30th day of October 2001.
|
"Louise Lamarre Proulx" |
J.T.C.C.