Madame made monthly payments to Monsieur pursuant to an interim agreement (later confirmed by an interim order) between her and him "without admission from either side of the reasons for payment." In a subsequent judgment, the Court retroactively characterized the monthly payments as support amounts and also ordered that Madame pay an additional amount to Monsieur as arrears of support amounts for Monsieur.
In addressing whether these amounts were includible under s. 56(1)(b) in computing the income of Monsieur and deductible under s. 60(b) in computing the income of Madame for the relevant taxation years, the Directorate found that the monthly payments satisfied “the conditions in the definition of support amounts provided for in subsection 56.1(4) at the time they were paid and therefore those amounts are deductible by Madame and taxable to Monsieur.” However, respecting the additional amount ordered to be paid as arrears of support, it:
[did] not constitute an amount of support for the purposes of subsection 56.1(4) since it was not an amount payable or receivable as a periodic allowance. That amount is therefore neither deductible by Madame nor taxable to Monsieur.