Spousal support is financial support that is paid, usually on a monthly basis, by one former spouse or common-law partner to the other.
If you are the one receiving the spousal support payments, then your former partner’s obligation to make the payment to you will arise under either a court order, or under an agreement the two of you have reached.
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How is Spousal Support Taxed?
When tax time rolls around, you may be wondering how those support payments are to be treated, for the purposes of filing your Income Tax Return with the Canada Revenue Agency.
The answer is straightforward: If you are receiving spousal support, under a court order or written agreement that specifies the amount, frequency and duration of the payments, then those amounts are fully taxable in your hands. In other words, all those amounts must be reported as “income” on your tax return, and will be taxed accordingly (this is unlike the situation with child support, which is usually considered non-taxable).
Generally speaking, that obligation to declare your spousal support as income on your tax return triggers a corresponding entitlement by your former spouse or partner to claim an equivalent deduction on his or her tax return for those same payments, with some exceptions.
What Counts as Spousal Support for These Purposes?
There are some important stipulations to be aware of when it comes to reporting spousal support. In addition to the requirement that payments are made under a court order or written agreement, the following conditions must also be met:
- The amount you are entitled to receive must be clearly-stated, and must be payable regularly (usually monthly);
- The payments must be made directly from your former spouse or partner, to you; and
- To claim the deduction, your former spouse or partner must be fully paid up on an all child support payments for the current and previous years.
Tax rules for court orders or written agreements made after April 1997
Note that there are slightly different tax rules for court orders or written agreements that were made after April 1997, as compared to those made before that date. However, these mainly impact the deductibility of child support payments made by the support-paying former spouse or partner; they have no impact on spousal support.
For more information on the Income Tax treatment of spousal support payments, including information about how spousal support payments are treated on the Tax Return of the person making the payments, see the Federal government website at: CRA: Support payments.