A-532-80
The Queen (Appellant) (Defendant)
v.
Jean-Paul Gagnon (Respondent) (Plaintiff)
Court of Appeal, Pratte and Le Dain JJ. and
Lalande D.J.—Montreal, October 2, 1981.
Income tax — Income calculation — Deductions — Appeal
from Trial Judge's decision that the respondent could deduct
monthly payments to his former wife — Decree absolute
provided that payments represented the repayment in capital
and interest of two hypothecs and taxes on an immovable
property — Whether payments constituted payment of an
allowance pursuant to para. 60(b) of the Income Tax Act —
Appeal allowed — Former wife was entitled to payments only
if she paid the sums owing under the deeds of hypothec —
Income Tax Act, S.C. 1970-71-72, c. 63, s. 60(b).
R. v. Pascoe [1976] 1 F.C. 372, agreed with.
APPEAL.
COUNSEL:
Wilfrid Lefebvre and Jacques Côté for appel
lant (defendant).
Claude A. Blanchard for respondent (plain-
tiff).
SOLICITORS:
Deputy Attorney General of Canada for
appellant (defendant).
Sirois, Blanchard, Beaudet, Watters &
Lamontagne, Quebec City, for respondent
(plaintiff).
The following is the English version of the
reasons for judgment delivered orally by
PRATTE J.: This appeal is from a judgment of
the Trial Division' which decided that in comput
ing his taxable income for the 1974, 1975 and
1976 taxation years, the respondent could deduct
sums of $360 per month that he had paid to his
former wife pursuant to a decree absolute of
divorce.
' [1981] 1 F.C. 249.
This divorce decree was granted on March 29,
1972. Confirming an agreement between the par
ties, it provided that the wife accepted, in payment
of her share of the community of property,
[TRANSLATION] an immovable having the municipal address
2620 La Picardière Street, City of Laval, district of Montreal,
and being her present residence.
This decree also ordered the parties to comply with
the agreement between them, which included the
following clauses reproduced in the decree:
[TRANSLATION] As alimentary pension for herself and for her
children, petitioner agrees to pay and respondent accepts
1. A monthly amount payable in advance on the first day of
each month at the residence of respondent of $300.00 Can.
2. For the benefit of respondent, petitioner will pay the monthly
payments due or to become due with respect to the immovable
which becomes the property of the respondent, the obligation
with respect to the said monthly payments being more fully
described in the agreement; the amount of the said monthly
payments is at present $360.00 and can vary as foreseen in the
said contract, but represents the repayment in capital and
interest of two hypothecs described therein as well as the
repayment by monthly payments of municipal and school taxes
affecting the said immovable, payable on the first of each
month, directly to respondent, commencing on June 1, 1971;
The sums of $360, which the judgment a quo
held to be deductible, were paid by respondent
under the terms of paragraph 2 of the above-cited
passage from the divorce decree.
Under paragraph 60(b) of the Act 2 , respondent
could deduct these sums in computing his income
if he had paid them to his wife "as alimony or
other allowance payable on a periodic basis".
It seems clear to me that the amounts in ques
tion were not paid as "alimony" in the sense in
which this expression is used in paragraph 60(b).
In that provision the expression has the restricted
meaning of the allowance which a spouse must pay
to his spouse for the duration of their marriage.
The only issue to be resolved is therefore whether
payment of the $360 sums constituted the payment
of an allowance.
2 Income Tax Act, R.S.C. 1952, c. 148, as amended by S.C.
1970-71-72, c. 63, s. 1.
In The Queen v. Pascoe' the Court gave the
following definition of the term "allowance" [at
page 374]:
An allowance is, in our view, a limited predetermined sum of
money paid to enable the recipient to provide for certain kinds
of expense; its amount is determined in advance and, once paid,
it is at the complete disposition of the recipient who is not
required to account for it. A payment in satisfaction of an
obligation to indemnify or reimburse someone or to defray his
or her actual expenses is not an allowance; it is not a sum
allowed to the recipient to be applied in his or her discretion to
certain kinds of expense.
In the case at bar the Trial Judge held that
payment of the sums in question constituted pay
ment of an allowance within the meaning of
Pascoe, because he was of the view that the sums
were at the complete disposition of respondent's
former spouse, who was not required to account
for them. I cannot share this view. In my opinion
respondent's former spouse was entitled to these
payments of $360 only if she paid the sums owing
under the deeds of hypothec registered against her
property. This was consequently not an allowance
within the meaning of Pascoe.
For these reasons I would allow the appeal, set
aside the judgment of the Trial Division and dis
miss the respondent's action. In accordance with
the suggestion made by counsel for the appellant, I
shall not award any costs either at trial or on
appeal.
* * *
LE DAIN J. concurred.
* * *
LALANDE D.J. concurred.
3 [1976] 1 F.C. 372.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.