CRA found that a life annuity required to be paid by a French-resident ex-spouse of the Canadian-resident taxpayer was includible in her income as a “support amount,” as defined in s. 56.1(4).
CRA referred to Art. 18(4) of the Canada-France Convention, which stated:
Alimony and other similar payments arising in a Contracting State and paid to a resident of the other Contracting State who is subject to tax therein in respect thereof, shall be taxable only in that other State.
It found that since the life annuity (but not the lump sum) was treated under Canadian domestic tax law as a taxable support amount, Art. 3(2) of the Convention deemed it to be amounts referred to in Art. 18(4), so that Canada had the exclusive right to impose tax thereon.