2014-0540961E5 Taxability of Support Payments

Principal Issues: Taxability of support payments and the difference between the two as it relates to the taxpayers file.

Position: General information provided

Reasons: Not a new interpretative query

Author: Robertson, George
Section: 60(b)

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                                                                                                                                                        2014-054096
                                                                                                                                                        George A. Robertson, CPA, CMA

September 15, 2014

Dear Sir or Madam:

Re:  Taxation of support payments

This is in response to your correspondence asking about the difference between taxable and non-taxable support payments. You also requested a search “for all amendments from May 1, 1997, to all old and new spousal and family court support orders and to all spousal agreements.”

This technical interpretation provides general comments about the provisions of the Income Tax 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 70-6R6, Advance Income Tax Rulings and Technical Interpretations.

We are enclosing copies of Guide P102, Support Payments, and Income Tax Folio S1-F3-C3: Support Payments which explain the taxation of support payments.

Whether a support payment is taxable to the recipient and deductible by the payer depends only on whether the payment meets the requirements in the Act, which requires consideration of the court order or written agreement. Generally, there are two types of support payments: spousal support and child support.

If the court order or written agreement was made before May 1997, an amount paid for spousal or child support was generally taxable to the recipient and deductible by the payer. However, the Act was changed by Budget 1996 so that a child support amount paid under an agreement or court order made or changed after April 1997 is generally not taxable to the recipient and not deductible by the payer.  Pages 9 and 10 of the Guide and paragraph 3.15 of the Folio explain this change. After April 1997, an amount paid for spousal support is still taxable to the recipient and deductible by the payer if it meets all of the requirements in the Act.

Unfortunately, privacy concerns do not allow this Directorate to search your file for personal information. Any questions you have about your personal tax situation should be addressed by calling the Canada Revenue Agency at 1-800-959-8281. You can also request forms and publications at that phone number.

We trust that 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
Legislative Policy and Regulatory Affairs Branch

Encl.:      Income Tax Folio S1-F3-C3: Support Payments
               Guide P102, Support Payments

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