Barrie M. Hayes, Partner, Family Law
The Income Tax Act recognizes spousal support payments as a tax-deductible expenditure.
The Act recognizes both married and common- law spousal support payments as tax-deductible. In order to qualify as a tax-deductible expenditure the spousal support order needs to;
1. Be embodied in a court order or written separation agreement;
2. The support payment be made on a periodic (i.e. monthly) basis;
3. The support recipient has discretion as to the use of the support payment.
Separated spouses can, in a court order or agreement, retroactively recognize historic spousal support payments as far back as January 1 of the year preceding the parties’ year of separation.
A spousal support payor can, in accessing the tax credit benefit of the spousal support payments, either claim the spousal support credit as part of the annual income tax filing and receive a larger income tax refund or claim the tax credit during the income tax year which will result in a lower income tax remittance to revenue Canada during the year.