Finance Act, 1983

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Maintenance in the case of separated spouses.

3.—(1) (a) (i) In this section—

“maintenance arrangement” means an order of a court, rule of court, deed of separation, trust, covenant, agreement, arrangement, or any other act, giving rise to a legally enforceable obligation and made or done in consideration or in consequence of the dissolution or annulment of a marriage or of such separation of the parties to a marriage as is referred to in section 192 (1) (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , and a maintenance arrangement relates to the marriage in consideration or in consequence of the dissolution or annulment of which or of the separation of the parties to which the maintenance arrangement was made or arises;

“payment” means a payment or part of a payment, as the case may be.

(ii) A reference in this section to a child of a person includes a child in respect of whom the person was, at any time before the making of the maintenance arrangement concerned, entitled to a deduction under section 141 of the Income Tax Act, 1967 .

(b) (i) This section applies to payments made, directly or indirectly, by a party to a marriage under or pursuant to a maintenance arrangement relating to the marriage for the benefit of a child of his, or for the benefit of the other party to the marriage, being payments—

(I) which are made at a time on or after the passing of this Act when the wife is not living with the husband,

(II) the making of which is legally enforceable, and

(III) which are annual or periodical:

Provided that this section shall not apply to such payments made under a maintenance arrangement made before the passing of this Act unless and until such time as one of the following events occurs, or the earlier of such events occurs where both occur, that is to say—

(A) the maintenance arrangement is replaced by another maintenance arrangement or varied,

(B) both parties to the marriage to which the maintenance arrangement relates, by notice in writing to the inspector, jointly elect that this section shall apply,

and where such an event occurs in either of the circumstances aforesaid, this section shall apply to all such payments made after the date on which it occurs.

(ii) For the purposes of this section and of section 4 , a payment, whether conditional or not, which is made, directly or indirectly, by a party to a marriage under or pursuant to a maintenance arrangement relating to the marriage (other than a payment of which the amount, or the method of calculating the amount, is specified in the maintenance arrangement and from which, or from the consideration for which, neither a child of the party to the marriage making the payment nor the other party to the marriage derives any benefit) shall be deemed to be made for the benefit of the other party to the marriage:

Provided that, where the payment, in accordance with the maintenance arrangement, is made or directed to be made for the use and benefit of a child of the party to the marriage making the payment, or for the maintenance, support, education or other benefit of such a child, or in trust for such a child, and the amount, or the method of calculating the amount, of such payment so made or directed to be made is specified in the maintenance arrangement, the said payment shall be deemed to be made for the benefit of such child, and not for the benefit of any other person.

(2) Notwithstanding anything contained in the Income Tax Acts, but subject to section 4 , as respects any payment to which this section applies which is made directly or indirectly by one party to the marriage to which the maintenance arrangement concerned relates for the benefit of the other party to the marriage—

(a) the person making the payment shall not be entitled, on making the payment, to deduct and retain thereout any sum representing any amount of income tax thereon,

(b) the payment shall be deemed for all purposes of the Income Tax Acts to be profits or gains arising to the said other party to the marriage and income tax shall be charged on that other party under Case IV of Schedule D in respect of those profits or gains, and

(c) the party to the marriage by whom the payment is made, having made a claim in that behalf in the manner prescribed by the Income Tax Acts, shall be entitled for all purposes of the Income Tax Acts to deduct the payment in computing his total income for the year of assessment in which the payment is made.

(3) Notwithstanding anything in the Income Tax Acts, as respects any payment to which this section applies which is made directly or indirectly by a party to the marriage to which the maintenance arrangement concerned relates for the benefit of any child of his—

(a) the person making the payment shall not be entitled on making the payment, to deduct and retain thereout any sum representing any amount of income tax thereon,

(b) the payment shall be deemed for all purposes of the Income Tax Acts not to be income of the child,

(c) the total income for any year of assessment of the party to the marriage who makes the payment shall be computed for all purposes of the Income Tax Acts as if the payment had not been made, and

(d) for the purposes of section 141 (6) of the Income Tax Act, 1967 , the payment shall be deemed to be an amount expended on the maintenance of the child by the party to the marriage who makes the payment and, notwithstanding that the payment is made to the other party to the marriage to be applied for or towards the maintenance of the child and is so applied, it shall be deemed for the aforementioned purposes not to be an amount expended by that other party on the maintenance of the child.

(4) (a) The provisions of sections 146 and 149 of the Income Tax Act, 1967 , shall apply to a deduction under subsection (2) (c) as they apply to any allowance, deduction or relief under sections 138 to 145 of that Act.

(b) The provisions of Schedule 4 to the Income Tax Act, 1967 , and of paragraph IX of Schedule 18 to that Act shall, with any necessary modifications, apply in relation to a deduction under subsection (2) (c).