The Crown argued that because the maintenance arrears of the taxpayer were reduced due to his diminished financial circumstances, the amounts paid by him to his former spouse pursuant to the amended judicial order "do not represent amounts paid for the maintenance of the former spouse but were, rather, amounts paid to obtain a release from an existing obligation", so that they did not qualify as payments of a "support amount". In rejecting the submission, and finding that the amounts were deductible to the taxpayer, Archambault, J. stated (at para. 22-23):
"... I do not believe that whenever a taxpayer pays an amount less than the amount of arrears of spousal support (or of any other deductible or taxable amount for that matter) one must automatically conclude that the amount so paid is not deductible or taxable because the nature of the payment has changed ... In my view, the situation is different where a person agrees to pay for being released from future obligations, such as the payment of a pension, an annuity or any other kind of future income."
Because the amounts the taxpayer was ordered to pay were for the support originally ordered, albeit reduced as a result of significant changes in his circumstances, the situation was different from that in which a reduced amount was negotiated between him and his former spouse.