Digests

Kennedy v. Canada

A-109-04

2004 FCA 437, Sexton J.A.

16/12/04

8 pp.

Income tax imposed on child support payments received by appellant in 1997, 1998--Appeal to Tax Court of Canada (T.C.C.) on basis these payments not taxable because of amendments to Income Tax Act, dismissed ([2003] 4 C.T.C. 2263; 2003 TCC 338)--T.C.C. found child support payments subject to "old regime" (i.e. regime applicable prior to 1997, where payments deductible by payer, taxable in hands of recipient)--Appellant, husband separated in 1991--Interim child custody, support order made in March 1991--Litigation between appellant, husband settled in December 1991 with written agreement providing for cost-of-living adjustment-- On appellant's motion, in order to obtain enforcement procedure to compel payment of cost-of-living increases, Ontario Court (General Division) issuing judgment on September 24, 1997 providing for payment of child support in same amount, same terms, conditions, including cost-of-living adjustment--Appellant arguing payments received after September 24, 1997 subject to "new regime" established by 1996 amendments (i.e. child support payments payable under written agreement, court order after April 1997 not taxable in hands of recipient or deductible by payer)--Methods by which becoming subject to new regime set out in definition of "commencement day" in Income Tax Act, s. 56.1(4)--If agreement has no commencement day, new regime not applying to payments made under it--Whether 1997 judgment creating commencement day within meaning of Act--1997 judgment not creating obligation to pay support, cost-of-living increases--That obligation created by 1991 court order-- Obligation created under old regime remaining subject to old provisions--Only agreements made after 1997 actually creating new obligations (such as changes to amounts payable) subject to new regime--Appeal dismissed--Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 56.1(4) (as enacted by S.C. 1997, c. 25, s. 9 (as am. by S.C. 1998, c. 19, s. 307)).