The taxpayer entered into a written separation agreement with his common law spouse in which he was obligated to make support payments. Several years later, they reconciled for two years, during which no payments were made. They then separated again and payments resumed.
The Court found that the support payments made after the reconciliation attempt were deductible under s. 60(b), on the basis that they were made pursuant to the original separation agreement. Neither party had considered the written agreement to have ever been cancelled. Therefore, the requirement for a written agreement under s. 56.1(4) was satisfied for the post-reconciliation payments.
Beaudry J. also noted (at para. 9) that the taxpayer's situation did not go to the mischief addressed by 56.1(4), which was that fraudulent support arrangements could more easily be alleged in the absence of a writing requirement, leading to unjust tax benefits. He also stated (at para. 10) that Parliament has demonstrated in other statutes a strong intention to encourage reconciliation.