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Docket: 2002-4566(IT)I |
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BETWEEN: |
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CRISTIAN NISTOR, |
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Appellant, |
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and |
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HER MAJESTY THE QUEEN, |
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Respondent. |
____________________________________________________________________
Appeal heard on May 8, 2003, at Toronto, Ontario
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Before: The Honourable Justice L.M. Little |
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Appearances: |
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For the Appellant: |
The Appellant himself |
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Counsel for the Respondent: |
Lorraine Edinboro |
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JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 2001 taxation year is allowed, without costs, and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Signed at Vancouver, British Columbia, this 17th day of October 2003.
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"L.M. Little" |
Little, J
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Citation: 2003TCC363 |
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Date: 20030917 |
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Docket: 2002-4566(IT)I |
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BETWEEN: |
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CRISTIAN NISTOR, |
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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
Little, J.
A. FACTS
[1] The Appellant was married to Maria Laura Serban ("Maria") in Romania on July 26, 1974. Their daughter Andreea Clementina Nistor ("Andreea") was born on March 28, 1977.
[2] The Appellant and Maria were divorced in 1981 pursuant to a Court Order issued under the laws of Romania.
[3] The Appellant remarried and in October 1996 the Appellant and his new wife moved to Canada.
[4] The Appellant became a Canadian citizen in 2000. During the 2001 taxation year the Appellant was a resident of Canada and a citizen of Canada.
[5] Pursuant to a decision of a Court in Romania the Appellant was required to pay child support payments to his former spouse for the support of Andreea. The requirement to pay for the support of Andreea came to an end when Andreea reached the age of majority under the laws of Romania, i.e. on March 28, 1995.
[6] On the 2nd day of November 1996 the Appellant signed a document which is referred to as a "Child Support Agreement" (Exhibit A-12). The opening paragraph of this document reads as follows:
This Agreement refers to the maintenance obligations of Cristian Nistor regarding his dependent daughter, Andreea Clementina Nistor ...
[7] The Child Support Agreement (the "Agreement") between the Appellant and Andreea dated November 1996 provided as follows (Note - this is a summary of the Agreement. It is not a quote from the actual Agreement.)
i) the Appellant agreed to pay the Daughter up to $450.00 per month, not exceeding an amount of $5,400 per year, and said payments would be made by means of a credit card held by the Daughter, i.e. the Appellant made payments on the Daughter's credit card;
ii) the Daughter had a bank account established in Romania to receive the amounts transferred from the Appellant via the credit card facility;
iii) the Agreement would remain in effect from the 11th day of October, 1996 as long as the Daughter remained in the University (the University of Medicine in Bucharest, Romania); and
iv) the Daughter undertook to preserve and forward to the Appellant all receipts regarding the withdrawal of money as cash advances on credit cards or purchases.
[8] The Agreement was read and agreed to by Maria, the Appellant's former spouse.
[9] Andreea was admitted as a full time student in the University of Medicine and Pharmacy in Bucharest, Romania in October 1996 and was a student at the said University during the 2001 taxation year.
[10] When the Appellant filed his Canadian income tax return for the 2001 taxation year he deducted the amount of $4,569.37 that he had paid to his daughter in that year.
[11] The Minister of National Revenue (the "Minister") reassessed the Appellant's 2001 taxation year and disallowed the child support payment of $4,569.37 that was claimed by the Appellant.
B. ISSUE
[12] The issue is whether the Appellant is entitled to deduct the amount of $4,569.37 as a child support payment in determining his income for the 2001 taxation year.
C. ANALYSIS
[13] Paragraph 60(b) of the Income Tax Act (the "Act") permits a taxpayer in certain circumstances to deduct amounts paid to a spouse or former spouse for the benefit of the children of the marriage in computing his income for a taxation year.
[14] Subsection 60.1(1) of the Act states that for the purpose of paragraph 60(b), where an order or agreement, or any variation thereof, provides for the payment of an amount by a taxpayer to a person for the benefit of the person, children in the person's custody or both the person and those children, the amount or any part thereof when payable, is deemed to be payable to and received by that person. In other words, where an amount is not paid to the former spouse but is paid to the benefit of the child in that person's custody, the amount that has been paid is deemed to have been paid to the spouse so that the payer may deduct the amount pursuant to paragraph 60(b).
[15] The Appellant testified that Andreea was in the custody of his former spouse in the 2001 taxation year.
[16] Exhibit A-11 is an Affidavit of Maria, the Appellant's former spouse. The Affidavit was translated into the English language and was sworn before a Notary on the 26th day of March 2002. In the Affidavit Maria said:
I declare that while living together with Andreea in the same apartment I received directly the support amount paid monthly by Cristian Nistor. Part of the money was used by Andreea to pay for half of the heating, hydro, phone, water and Residential Fees for the apartment we are both living in. The rest was used for her own needs, books, transportation, clothing, entertainment, etc. but also to buy food for her. The entire support amount received in the conditions described was in fact for the support of Andreea and even if sent to me the destination would have remained the same. I also had my own contribution to the house expenses but this was proportionate to my income.
[17] I accept the testimony of the Appellant supported by the Affidavit of Maria that Andreea was in the custody of Maria (the former spouse) in the relevant period.
[18] I also wish to note that the provisions of the 1996 Act would apply to support orders predating May 1997. This conclusion follows since support orders predating May 1997 lack a "commencement date" within the meaning of subsection 56.1(4) of the Act. Subsection 56.1(4) defines "commencement date" as the day, after April 1997 upon which the court order or written agreement institutes child support payments. In this situation, the Appellant and Andreea reached their agreement in November 1996.
[19] In my opinion the amount of $4,569.37 was a support amount within the meaning of subsection 60.1(1) of the Act and the Appellant is allowed to deduct this amount pursuant to paragraph 60(b) in determining his income for the 2001 taxation year.
[20] In support of my conclusion I refer to the following decisions of the Tax Court.
[21] In Sadler v. The Queen, [1997] 3 C.T.C. 2698 Mr. Justice Bell said that "custody" should be given its ordinary meaning rather than its legal meaning and allowed the appeal.
[22] In Marsh v. The Queen, [2001] T.C.J. No. 629 (Q.L.) Mr. Justice O'Connor held that the taxpayer was entitled to deduct child support payments made to the taxpayer's adult son who was living in a university dormitory.
[23] The appeal is allowed without costs.
Signed at Vancouver, British Columbia, this 17th day of October 2003.
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"L.M. Little" |
Little, J.
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CITATION: |
2003TCC363 |
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COURT FILE NO.: |
2002-4566(IT)I |
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STYLE OF CAUSE: |
Cristian Nistor and Her Majesty the Queen |
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PLACE OF HEARING: |
Toronto, Ontario |
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DATE OF HEARING: |
May 8, 2003 |
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REASONS FOR JUDGMENT BY: |
The Honourable Justice L.M. Little |
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DATE OF JUDGMENT: |
October 17, 2003 |
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APPEARANCES: |
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For the Appellant: |
The Appellant himself |
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Counsel for the Respondent: |
Lorraine Edinboro |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
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Firm: |
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |