28 September 1999 External T.I. 9917105 - CHILD SUPPORT PAYMENTS

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Pursuant to a pre-May 1997 written agreement, the taxpayer is required to pay the recipient, who is the natural parent of his child, $XXXXXXXXXX per month. The taxpayer and the recipient were never spouses of each other. The taxpayer paid $XXXXXXXXXX per week to the recipient. What is the tax treatment of child support amounts paid?

Position: Former paragraph 60(c) of the Act provided for a deduction in respect of an amount paid by a taxpayer in the year as an allowance payable on a periodic basis for the maintenance of the recipient, children of the recipient, or both, if the payer was living separate and apart from the recipient at the time the payment was made and throughout the remainder of the year, the taxpayer is the natural parent of the child, and the amount is received under an order made by a competent tribunal under the laws of a province. As a written agreement does not constitute an order made by a competent tribunal under the laws of a province, the child support payments are not deductible. For 1997 and subsequent years, the deduction formerly made in paragraph 60(c) of the Act is now made under paragraph 60(b) of the Act. However, for purposes of paragraph 60(b) of the Act, paragraph (b) of the definition of "support amount" in subsection 56.1(4) of the Act still requires that "the payer is a natural parent of the recipient and the amount is receivable under an order made by a competent tribunal in accordance with the laws of a province".

Reasons: See E7M14855, 9516445, E74598

xxxxxxxxxx 991710
G. Moore

September 28, 1999

Dear XXXXXXXXXX:

RE: Child Support Payments

We are replying to your letter of June 8, 1999, regarding child support payments.

xxxxxxxxxx

Our Comments

Written confirmation of the consequences inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in a manner set our in Information Circular 70-6R3. Where the particular transactions are partially completed or completed, the enquiry should be addressed to the relevant Tax Services Office. In addition, the confidentiality provisions of the Income Tax Act (the "Act") prohibit the provision of taxpayer information to anyone other than the taxpayer without the taxpayer's written authorization. We do not have a letter of authorization from XXXXXXXXXX permitting us to discuss his income tax affairs with you; however, we are prepared to provide the following comments, which are of a general nature.

As you may know, former paragraph 60(c) of the Act provided for a deduction in respect of an amount paid by a taxpayer in the year as an allowance payable on a periodic basis for the maintenance of the recipient, children of the recipient, or both if:

• the taxpayer was living separate and apart from the recipient at the time the payment was made and throughout the remainder of the year,
• the taxpayer is the natural parent of the child of the recipient, and
• the amount is received under an order made by a competent tribunal under the laws of a province.

For 1997 and subsequent years, the deduction formerly made in paragraph 60(c) of the Act is now made under paragraph 60(b) of the Act. However, for purposes of paragraph 60(b) of the Act, paragraph (b) of the definition of "support amount" in subsection 56.1(4) of the Act still requires that "the payer is a natural parent of the recipient and the amount is receivable under an order made by a competent tribunal in accordance with the laws of a province".

An order of a competent tribunal is a decree, order or judgment made by a court or other competent tribunal. Nothing less than a concrete pronouncement, decree or direction of a tribunal empowered to make an order will constitute "an order made by a competent tribunal". As a written agreement does not constitute an order made by a competent tribunal under the laws of a province, any child support payments made pursuant to a written agreement are not deductible pursuant to paragraph 60(b) of the Act. Furthermore, if a taxpayer chooses to pay child support in excess of the amount of child support payable stipulated in an order of a competent tribunal, such amounts are not deductible to the payer as paragraph 60(b) of the Act requires that the amount paid has to be, among other things, received under an order made by a competent tribunal under the laws of a province.

We trust our comments will be of assistance to you.

Yours truly,

J. Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch