| 4/2/2012 |
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| Court of Appeal - Decisions in Income Tax Cases |
| Case No: 55 |
Decided on 4 June, 1964 |
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Alimony Payments Made By A Husband To His Legally Seperated Spouse Constituted Income In Her Hands Despite That The Community Of Acquests Had Not Been Dissolved
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Note: This case was decided before the introduction of the Family Law into the Civil Code and the arrangements regarding separate taxation of husband and wife in the Income Tax Act.
The Board of Special Commissioners had essentially held that all the family income formed part of the community of acquests between husband and wife, and that the husband, as the head of the community, was merely allocating a part of the community income to his wife as agreed by means of a notarial deed. The alimony paid could not, therefore, constitute a separate source of income in the hands of the wife.
The Court of Appeal overturned the Board's decision. The fact that, under Civil Law, the husband was still obliged to maintain his separated wife did not, of itself, conclude the matter. One had to see whether the form adopted to give effect to this obligation had given rise to a new income for the purposes of the Income Tax Act. The question of form against substance was again considered and the Court's decision in case no 44 reaffirmed.
Legal Seperation had, in a sense, created two separate domestic economies with specific obligations that went beyond the concept of a communal budget under the community of acquests. Where there was no legal separation as such, the fact that spouses may have been living separately because of fortuitous events (such as sickness) did not create separate economies. Civil law itself, however, recognized that different circumstances arise where contractual obligations are assumed on separation.
The Income Tax Act made liable to tax any "charge", "pension" and "annuity". Contractual alimony payments clearly fall under one or other of these sources of income. The Court also pointed out that there was no necessity for the alimony to be paid out of income on the community of acquests. The obligation was a personal obligation of the husband which he had to satisfy even if there was no income accruing to the community of acquests.
BSC Case No: 12/63
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