Roland St-Onge (orally: February 13, 1978):—The appeal of Mr Gerhard Hausmann came before me on February 13, 1978, at the City of Vancouver, British Columbia. It has to deal with the separation agreement between his estranged wife and himself.
The undisputed facts are as follows, and I quote from the Reply to the Notice of Appeal:
2. In 1973, the Appellant transferred his interest in his matrimonial home to his wife, Patricia Hausmann, who became the sole owner and mortgagor of the matrimonial home.
3. The Appellant and his wife entered into a Separation Agreement dated June 1, 1974.
4. The Separation Agreeement required the Appellant, inter alia, to:
(a) make. all monthly mortgage payments with respect to the matrimonial home;
(b) maintain medical insurance coverage for his wife and children and
pay all reasonable dental accounts on behalf of his wife and children;
(c) pay to his wife maintenance in the amount of $175 per week for, his wife and children.
5. By an amended Return dated December 15, 1975, the Appellant duly reported his income for 1974, claiming, inter alia, a deduction for alimony payments in the amount of $12,119.23, consisting of $5,250 in weekly payments made directly to his wife, $6,224.73 in mortgage payments, and $644.50 paid to cover medical insurance premiums and dental bills.
6. The Respondent assessed the Appellant disallowing that part of the deduction for alimony payments consisting of mortgage, medical and dental payments.
9. The Respondent submits that section 60.1 of the Act must be read in conjunction with paragraph 60(b). Therefore, to be deductible under section 60.1 payments to third parties must be an “allowance” within the meaning of paragraph 60(b). The Respondent submits that the mortgage payments and the medical and dental payments were not a sum allowed to the Appellant’s wife to be applied in her discretion to certain kinds of expenses and accordingly were not an “allowance” as required by paragraph 60(b).
As may be seen, the mortgage payments cannot be regarded as alimony payments, especially since the decision of the Federal Court of Appeal in Attorney-General of Canada v Weaver, [1975] CTC 646; 75 DTC 5462. In that decision, a definition of alimony was given as follows:
an allowance, in our view is a limited pre-determined sum of money paid to enable the recipient to provide for certain kinds of expense; its amount is determined in advance and, once paid, it is at the complete disposition of the recipient who is not required to account for it. A payment in satisfaction of an obligation to indemify or reimburse some one or to defray his or her actual expense is not an allowance; it is not a sum allowed to the recipient to be applied in his or her discretion to certain kinds of expense.
Furthermore, it is obvious that mortgage payments, although. paid periodically, cannot be regarded as alimony since the main purpose thereof is to increase the assets of the individual being a payment to acquire an asset.
For these reasons, the appeal is dismissed.
Appeal dismissed.