2015-0599561E5 Spousal support

Principal Issues: Can garnishment payments be considered as spousal support?

Position: Not enough information given; general information provided.

Reasons: No evidence that garnishment amounts relate to spousal support.

Author: Robertson, George
Section: 56.1(4); 56(1)(b); 60(b)

XXXXXXXXXX                          2015-059956
                                                  George A Robertson, CPA CMA
                                                  (905) 721-5196

November 27, 2015

Dear: XXXXXXXXXX

Re:  Taxation of support payments

This is in response to your correspondence dated July 8, 2015, regarding the taxation of payments received under garnishment orders against a former spouse. You have told us that you requested the garnishments to enforce a claim for spousal support and ask if the garnishment payments that were received as lump-sum payments on an irregular basis are spousal support payments under the Income Tax Act (“Act”). We tried to contact you to review your query; however, the telephone number provided was not in service.

Our Comments

This technical interpretation provides general comments about the provisions of the 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.

The Canada Revenue Agency's (“CRA”) general views regarding the taxation of support amounts can be found in Income Tax Folio S1-F3-C3: Support Payments (“Folio”), available at http://www.cra-arc.gc.ca/. The tax treatment of a support payment depends partly on whether the amount is a “support amount” as explained in paragraph 3.10 of the Folio. Among other criteria, a support amount must be receivable under an order of a competent tribunal or under a written agreement, which is further explained in the Folio beginning at paragraph 3.28. A court order or written agreement requiring payment of support for a spouse or former spouse must be registered with the CRA by filing a Form T1158, Registration of Family Support Payments. The registration process assists the CRA in their review of tax returns for both parties.

Support payments made under a written agreement or a court order that are solely for the maintenance of the spouse or former spouse are generally referred to as spousal support payments. Spousal support payments that meet all of the requirements of the Act are deductible by the payer under paragraph 60(b) of the Act and are included in the income of the recipient under paragraph 56(1)(b) of the Act. Generally, amounts paid for the support of a child are not included in income of the recipient, nor are they deductible to the payer.

Although you have provided a copy of the garnishment orders, these are not a substitute for a written agreement or court order requiring the payment of a spousal support amount. The garnishments, in themselves, are not indicative that the amounts paid can be attributed to any spousal support, child support or distribution of property. Therefore, we cannot give any indication of whether the payments you received represent support amounts.

Additional information on the taxation of support payments can be found at http://www.cra-arc.gc.ca/supportpayments/ and in Guide P102, Support Payments, also available on the CRA website.

We trust that these comments will be of assistance.

Yours truly,

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

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