Date: 20000322
Docket: 1999-4129-IT-I
BETWEEN:
LOUISE MONGRAIN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
(Delivered orally from the bench on February 28, 2000, at Montreal, Quebec)
Lamarre Proulx, J.T.C.C.
[1] These are appeals concerning the 1996 and 1997 taxation years.
[2] The point at issue is whether the appellant must include alimony of $3,600 in her income for each of the years in issue.
[3] The facts on which the Minister of National Revenue (the "Minister") relied in making his reassessments are set out in paragraph 4 of the Reply to the Notice of Appeal (the "Reply"):
[TRANSLATION]
(a) the appellant did not report in her returns of income initially filed for the 1996 and 1997 taxation years any taxable income from alimony or from any other allowance payable on a periodic basis;
(b) the Minister assessed the appellant's initial return as filed for each of the taxation years in issue;
(c) a written agreement dated August 11, 1995 between the appellant and Fernand Tremblay (hereinafter the "former spouse") states:
(i) that child support was payable for the children Sophie and François;
(ii) that the amount of the child support payable was $300 a month;
(iii) that the agreement was for three years and ended on September 1, 1998;
(d) an examination of the former spouse's proofs of payment showed that he had paid the appellant $3,600 as alimony or other allowance payable on a periodic basis in each of the taxation years in issue.
[4] The appellant testified for herself and her former spouse, Fernand Tremblay, testified at the request of the agent for the respondent.
[5] The appellant admitted the facts set out in subparagraphs 4(a) to (c) of the Reply and denied subparagraph 4(d).
[6] The agreement referred to in subparagraph 4(c) was filed as Exhibit A-1.
[7] The appellant explained that, in 1994, she lent her former spouse approximately $3,600 to purchase a big-screen television and that it was this loan that her former spouse repaid in 1996. In cross-examination, the agent for the respondent filed Exhibit I-1, which was a conveyance dated August 10, 1995 between the appellant and her former spouse concerning the family residence. The vendor was Fernand Tremblay and the purchaser was the appellant. On page 2 there is a description of the movable property that was included in the sale and of that which was excluded. The television set was among the movables excluded from the sale. The appellant was surprised that this document was filed.
[8] For 1997, the appellant admitted that the payments were child support payments, but she said she felt she did not have to include them since the Income Tax Act (the "Act") had changed in 1997.
[9]Fernand Tremblay explained that there had been no loan agreement between the appellant and him respecting a big-screen television. He added that he had paid the amounts provided for in the agreement dated August 11, 1995 (Exhibit A-1) in compliance with that agreement. Exhibits I-2 and I-3 are the receipts proving that all the monthly $300 payments for 1996 and 1997 were deposited in the bank.
Analysis
[10]Exhibit I-1, the conveyance of Fernand Tremblay's property to the appellant not only provides for the sale of the property but also for the division of movables and the discharge of the mortgage. That document is dated August 10, 1995. The agreement between the former spouses respecting child support (Exhibit A-1) is dated August 11 1995. It is therefore surprising that the appellant did not bring a copy of Exhibit I-1 with her since, together with Exhibit A-1, it forms an integral part of the agreement between the parties respecting the former spouses' property settlement and allowances for the children.
[11] It is apparent from Exhibit I-1 that there was no loan agreement between the appellant and her former spouse after August 10, 1995 respecting a big-screen television, if indeed such an agreement had ever previously existed. The notarial deed of August 10, 1995 clearly states that this television set belonged to the former spouse and contains no mention of any debt of the former spouse in respect thereof.
[12] In Danielle Serra and Denyse Hamer v. The Queen, 98 DTC 6602, the Federal Court of Appeal held that alimony paid to a former spouse for the maintenance of children must be included in the income of the recipient under paragraphs 56(1)(b), (c) or (c.1) of the Act.
[13] With respect to 1997, the Act was amended so that periodic allowances paid for the care of the children would no longer be included in the recipient's income. However, this applies only with respect to agreements made after April 1997. For agreements prior to that date, a joint election must have been filed with the Minister as provided for in subsection 56.1(4) of the Act. This election was not made in the instant case.
[14] For 1996 and 1997, as the monthly $300 payments for the maintenance of the children were made in compliance with the agreement between the former spouses dated August 11, 1995, as may be seen from Exhibits A-1, I-2 and I-3, and since no valid evidence to the contrary was adduced, the appeals are dismissed.
Signed at Ottawa, Canada, this 22nd day of March 2000.
"Louise Lamarre Proulx"
J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]