Winnipeg Taxation Centre Business and General Client Services Section Division David Barlow, Unit Head
Application of Paragraph 60(c) to Paternity Agreements
This is in reply to your memorandum of June 29, 1993 in which you requested our views as to whether payments made pursuant to the terms of a paternity agreement that has been stamped by or registered in the court would be deductible by the payer under the provisions of paragraph 60(c) (formerly paragraph 60(c.1)) of the Income Tax Act (the Act) as payments made pursuant to an order made by a competent tribunal.
Included with your memorandum is a copy of the relevant sections of the Maintenance and Recovery Act (MRA) of the Province of Alberta. We note that Section 8 in Part 2 of the MRA contains several definitions of terms used in the legislation. Two of the defined terms are "agreement" and "order", clearly providing a distinction between the two terms. Section 10 of the MRA sets out the circumstances under which the mother and the "putative father" may enter into an agreement to provide support for the child. In contrast, Sections 11 to 20 of the MRA set out the circumstances which may culminate in an order being made by the court. Although both an agreement and an order appear to be equally enforceable before the law, there is a clear distinction between the two documents.
The interpretation of the term "order made by a competent tribunal" in paragraph 60(c) of the Act will include an order made under Section 20 of the MRA but is not sufficiently broad to include an agreement between the parties entered into under section 10. We agree that, in the event that the putative father under a paternity agreement is delinquent in his payments and that delinquency results in a complaint before the court and the issuance of an order by the court, the amounts paid pursuant to that order would be an amount described in paragraph 60(c) of the Act.
Also attached to your memorandum is a copy of a previous opinion issued by this Directorate on July 21, 1992 in response to an enquiry made in the context of the family law of the Province of Ontario. In that opinion we expressed the view that a paternity agreement does not constitute an "order" made by a competent tribunal, even though it as enforceable as an order of the court. The Department's position has not changed in this regard.
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P.D. Fuoco Section Chief Personal and General SectionBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
c.c. Client Assistance Directorate