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:

whether a 1996 amendment to a court order can have retroactive effect to years prior to 1995 despite wording of 60.1(3)

Position:

if original intent of all parties to order is reflected in the amendment that yes, otherwise, 60.1(3) applies to limit retroactively to max. of year prior to date of amendment/new order. In this case, no retroactively beyond year before date of amendment

Reasons:

additional info reviewed and it is not clear what intent of parties was at time of original order -will not amend returns without irrefutable evidence as to intent (essentially must be agreement between parties and this does not exist).

	                                 	971114
XXXXXXXXXX                              	Sandra Short

June 24, 1997

Dear Sirs:

Re: XXXXXXXXXX ("the client")

This is in reply to your letter dated May 6, 1997, concerning the client's entitlement to an alimony or maintenance deduction for third party payments made in the years 1992 through to 1996, pursuant to a 1996 amendment to the original court order.

Background Facts:

1.The original court order, dated XXXXXXXXXX, provided, in paragraph 3, that the client was to pay interim support in the amount of $XXXXXXXXXX per month, commencing XXXXXXXXXX.

2.The original order was amended on XXXXXXXXXX. Child access conditions were clarified and paragraph 3 was deleted and replaced with the following:

XXXXXXXXXX.

3.On XXXXXXXXXX, the Ontario Court amended paragraph 3(a) of the XXXXXXXXXX, amendment (reproduced in 2 above) to add that the payments " XXXXXXXXXX " The 1996 motion was not opposed by the client's spouse.

As you are aware, during April of this year, we recommended that the Ottawa Tax Services Office adjust the client's returns for the 1995 and 1996 years only, pursuant to the provisions of subsection 60.1(3) of the Act. We did not support the argument that the 1996 amendment could have retroactive effect to 1992 for purposes of the administration of the Income Tax Act. However, it is the Department's position that if a court order, which intends that certain amounts be taxable and deductible, is lacking in correct phrasing, an amending order which incorporates the correct phrasing and clearly indicates that it is the intent of all parties in the original order, and introduces no variations to the original order save to clarify its original intent, then the amending order can have retroactivity to the date of the original order.

You have submitted additional information to support the client's contention that it was always his intent, and that of his spouse or former spouse, that the third party payments be deductible to him.

Our Comments:

We have reviewed the additional information submitted by you including the arguments to support a finding that the 1996 amendment to the court was an amendment which introduced no variations to the original order, as amended in 1993, save to clarify its original common intent regarding the deductibility of the amounts to the client.

After reviewing all documentation on file relating to this issue, we are unable to agree that the evidence conclusively supports a finding that it was clearly the common intent of both parties that the client be entitled to a deduction for third party payments. An inconclusive finding as to common intent is insufficient to justify a recommendation that the client's returns be adjusted for years prior to 1995. Accordingly, the Department is restricted to the statutory limitations regarding retroactivity, as contained in subsection 60.1(3) of the Act.

We trust our comments will be of assistance to you.

Yours truly,

John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch