Leinweber v. R. - TCC: Amendments to support arrangements not effective to entitle taxpayer to child credits

Leinweber v. R. - TCC:  Amendments to support arrangements not effective to entitle taxpayer to child credits

http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/182033/index.do#

Leinweber v. The Queen (November 7, 2016 – 2016 TCC 253, V. Miller J.).

Précis:   The taxpayer and his former spouse shared custody of two children.  Originally he was to pay a net amount to his former spouse.  He was denied child credits for 2012 and he and his wife tried to amend their support arrangements but CRA rejected the amendments.  They then applied to the Court to vary their final Order of support.  The Tax Court found that neither amendment was effective.  The taxpayer was still the sole person making a “net” payment to his former spouse.  The appeal was dismissed.  There was no order as to costs since this was an informal procedure appeal.

Decision:   The sole question before the Court was whether the taxpayer and his former spouse had succeeded in amending the support arrangements between them such that he was entitled to child credits in 2012:

[15]        Mr. Leinweber and his former spouse have attempted to avoid the application of subsection 118(5) of the Act so that subsection 118(5.1) would apply to their circumstances. They altered their Separation Agreement by including the Addendum and when that proved not to be effective to avoid the application of subsection 118(5), they had the Final Order varied.

[16]        It is my view that Mr. Leinweber did not succeed in avoiding the application of subsection 118(5). Neither the Addendum nor the Variation Order required the former spouse to pay a “support amount” within the meaning of subsection 56.1(4).

[17]        The Addendum clearly stated that Mr. Leinweber “shall pay” his former spouse an amount based on the set-off principle. The parties defined “the set off principles” as “Jeffrey paying Jennifer” and “Jennifer paying Jeffrey”. That is not sufficient to meet the definition of support amount in subsection 56.1(4).

[18]        The recipient of a support amount must have the discretion to use the amount as he pleases. According to the terms of the Addendum, only Mr. Leinweber actually paid an amount. Therefore, only Jennifer received a support amount because only she had discretion as to the use of the amount in accordance with subsection 56.1(4).

[19]        Although the Variation Order required each of Mr. Leinweber and his former spouse to pay an amount, it required that Mr. Leinweber make a “net payment” to his former spouse. Again only Mr. Leinweber is required to pay a support amount. Only his former spouse has discretion as to the use of the amount she received in accordance with subsection 56.1(4).

[20]        In addition, the Variation Order does not have retroactive effect. It is effective from the date of the Variation Order which was September 15, 2016. There is nothing in the Variation Order which states that the Order itself is retroactive to and effective on July 1, 2012.

Accordingly the appeal was dismissed.  There was no order as to costs since this was an informal procedure appeal.