Canada v. Jasper
T-52-89
MacKay J.
6/7/94
19 pp.
Appeal from Tax Court decision holding payments received by defendant from former husband on account of capital, not subject to tax under Income Tax Act, s. 56(1)(b) -- Separation agreement providing for payment from July 1980 until June 1982 of $1,500 per month, including $200 for each of three children still at home, $300 for maintenance of defendant, $600 for monthly mortgage payment -- Thereafter payments decreasing to $600 per month plus one-half of mortgage payment until all children completed education -- No maintenance for defendant as completed studies, able to become self- supporting, but payments to her to include amount of one-half mortgage payment -- Agreement also giving defendant exclusive possession of matrimonial home until all children completing education, at which time would sell home, divide proceeds equally -- Amending agreement increasing support for two children still living at home to $800 and continuing payments for one-half of mortgage payment -- Also providing for transfer of home to defendant and five children as joint tenants -- Defendant not including monthly payments made by former husband in relation to mortgage in income -- Arguing payments in regard to mortgage after June 1982 payments to protect his own capital asset, i.e. one-half interest in matrimonial home, and later capital for benefit of children, not maintenance payments -- Appeal allowed -- Payments for mortgage made to defendant by former spouse allowance within Act, s. 56(1)(b) for maintenance of defendant, children, subject to tax -- Most of factors enumerated in McKimmon v. M.N.R., [1990] 1 F.C. 600 (C.A.) to determine whether payment of capital nature or allowance for maintenance, supporting classification of mortgage payments as allowance for maintenance of defendant, children -- That payments towards mortgage to continue only so long as children living at home and completing education, and unrelated to share of ownership in property but related to anticipated need for support of defendant, children, supporting classification of payments as allowance for maintenance -- Court not convinced any legal impediment to defendant disposing of payments for other purposes -- After conveyance of property to defendant, children, continuing payment of half mortgage payments by former husband primarily benefitting children, but payments still within s. 56(1)(b) -- Income Tax Act, S.C. 1970-71-72, c. 63, s. 56(1)(b).