2014-0525691E5 DEDUCTIBILITY OF SUPPORT AMOUNTS

Principal Issues: Are amounts paid for adult interdependent (Alberta) support deductible under paragraph 60(b)?

Position: A question of fact.

Reasons: The amount must be a support amount under 56.1(4) of the Act.

Author: Robertson, George
Section: 56.1(4); 60(b); 248(1); Adult Interdependent Relationships Act of Alberta: 1(1); 3(1); 3(2); Personal Income Tax Act of Alberta: 1(2); Family Law Act of Alberta: 56, 57(1); 62(1); 62(2)

XXXXXXXXXX
2014-052569
George A. Robertson, CPA, CMA

August 1, 2014

Dear XXXXXXXXXX:

Re: Deductibility of Support Payments

This is in response to your correspondence dated March 21, 2014, regarding the deductibility of adult interdependent support payments. Specifically, you have asked whether the payments you made pursuant to a consent order for an adult interdependent relationship (AIR) are deductible for purposes of income tax.

OUR COMMENTS

This technical interpretation provides general comments about the provisions of the Income Tax Act (Act) and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, Advance Income Tax Rulings.

Our understanding of an AIR according to the Adult Interdependent Relationships Act is that an AIR is generally a common-law relationship, although there can be an AIR between individuals who live in a non-conjugal relationship and even between family members. Generally, an AIR exists when a person has lived with the other person in an interdependent relationship for a continuous period of not less than 3 years, or of some permanence if there is a child, or the persons have entered into an adult interdependent partner agreement.

In order for an amount paid for spousal support to be deductible under paragraph 60(b) of the Act, it must first qualify as a “support amount” as defined in subsection 56.1(4) of the Act. Subsection 56.1(4) provides that an amount is a support amount if:

• it is payable or receivable as an allowance on a periodic basis;
• it is paid for the maintenance of the recipient, children of the recipient or both the recipient and children of the recipient;
• the recipient has discretion as to the use of the amount; and where the recipient of the amount is the spouse or common-law partner or former spouse or common-law partner of the payer, the parties are living separate and apart because of a breakdown of their relationship and the amount is receivable under an order of a competent tribunal or under a written agreement; or, where the payer is a legal parent of a child of the recipient, the amount is receivable under an order made by a competent tribunal in accordance with the laws of the province.

A condition noted above is that the recipient must be a parent, spouse or common-law partner (or former spouse or common-law partner). Subsection 248(1) of the Act defines “common-law partner” as:

• a person who cohabits in a conjugal relationship with the taxpayer and has done so throughout a continuous period of at least 12 month; and
• a person who cohabits in a conjugal relationship with the taxpayer and is the parent of a child of the taxpayer for one of the following reasons:
  • the person is the legal parent of the child; or
  • the child is wholly dependent on the person for support and the person has, in law or in fact, the custody and control of the child (or did immediately before the child turned 19 years of age).

Under the definition of common-law partner, once individuals begin to cohabit in a conjugal relationship they are deemed to continue cohabiting in that conjugal relationship until they live separate and apart for a period of 90 consecutive days because of a breakdown of their conjugal relationship. After this 90-day period has passed, the effective day of the change of marital status is the date the individuals started living separate and apart.

If the individual to whom you must pay support is your common-law partner (or former common-law partner) as defined in the Act and the other criteria for support payments are met, the payments would be support amounts for purposes of subsection 56.1(4) of the Act. Additional information is available in Guide P102 “Support Payments” available on the Canada Revenue Agency website.

We trust these comments will be of assistance.

Yours truly,

Pamela Burnley, CPA, CA
Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate

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