Canada v. Larsson
A-623-96
McDonald J.A.
5/8/97
10 pp.
Judicial review of Tax Court's decision mortgage payments deductible-Taxpayer, former wife separated-In 1989 British Columbia Supreme Court (B.C.S.C.) ordering taxpayer to pay interim spousal maintenance in form of monthly mortgage payments as well as interim child support-In 1991 second order providing for sale of matrimonial home-Court also ordered taxpayer to pay lump sum spousal maintenance, maintenance arrears-Court also stating any spousal, child support payments made by way of mortgage payments on matrimonial property deemed periodic maintenance payments pursuant to Income Tax Act-Third order in 1993 amending second order to include all mortgage payments made between 1989 and 1990 so that all such payments deemed to be periodic payments-Fourth order in 1994 amending first order so that taxpayer ordered to pay interim spousal maintenance in form of monthly mortgage payments on matrimonial home commencing with payment for November 1989, and such payments deemed periodic maintenance payments pursuant to Income Tax Act, ss. 60.1(2), 56.1(2)-Tax Court holding as recipient spouse having discretion at time entered into support agreement, sufficient to characterize support payments as discretionary, thus bringing them within deduction framework in s. 60.1(1)-Application dismissed-Where spouse making directed support payments pursuant to agreement or court order, Income Tax Act deeming such payments to be allowance for purposes of Act where agreement or court order specifically mentioning ss. 60.1(2), 56.1(2)-Fourth order only order in which ss. 60.1(2), 56.1(2) mentioned-Whether fourth order intended to apply retroactively-Usually court order effective from date on which made unless providing otherwise-B.C.S.C. not explicitly stating fourth order to apply retroactively, but specifically contemplating nature of mortgage payments made since 1989 by taxpayer-At time fourth order made in 1993, matrimonial home sold, no more mortgage payments would be made by taxpayer-If fourth order not intended to have retroactive effect, would be moot-Indicator of retroactivity-May even defeat presumption against retroactivity-Perverse to interpret Court's ruling so as to render it moot from inception-No other reasonable interpretation than to assume B.C.S.C. intending fourth order to have been made nunc pro tunc-All mortgage payments made pursuant to first, second, third orders deemed to be allowances under s. 60.1(2)-Mortgage payments made pursuant to Court order as amended deductible-Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, ss. 56.1(2), 60.1(2).