If you’re in the process of splitting up with a spouse or common-law partner you’re probably going through a lot of changes right now, and taxes may be the last thing on your mind. However before you settle the details of your support agreement, take a moment to familiarize yourself with the tax implications.
The first thing to know about support is that child support and spousal support are treated very differently for tax purposes. Spousal support is a tax deduction for the person paying, and taxable for the person receiving it. Child support cannot be used as a tax deduction for the supporting person, and is not taxable for the receiving person (though it is reported on the income tax return of the receiver).
|Type of Support||For the Person Providing the Support||For the Person Receiving the Support|
|Spousal Support||Deductible (reduces tax)||Taxable (increases tax)|
|Child Support||Not tax deductible||Reported on tax return, but not taxable|
Since they’re treated so differently, it’s important to know whether amounts being paid/received are considered spousal support or whether they’re considered to be child support.
The Canada Revenue Agency defines spousal support as a periodic amount payable under a written agreement or court order. Lump sums (other than those that are retroactive payments to spousal support that is past due), voluntary amounts, or payments above the amount specified in the agreement or court order are all considered to be child support.
|Conditions||Type of Support|
|Periodic amounts specified as amounts for spousal maintenance in a written agreement or court order||Spousal Support|
|Amounts in excess of agreed-upon or court-ordered payments||Child Support|
|Lump sums to pay previous amounts owed for spousal maintenance under a written agreement or court order||Spousal Support|
|Lump sums paid that don’t relate to a written agreement or court order||Child Support|
|Amounts specified in a written agreement or court order that are specified to be for both the recipient (spouse) and the child||Child Support|
One more thing to know about child support is that the recipient is usually able to claim the Eligible Dependant Exemption for one child, which has some tax advantages. The payer of child support cannot claim the Eligible Dependant Exemption.
CRA Website – Support Payments:
CRA Website – Eligible Dependants: