Support Payments Redux

So you’ve split up with your significant other, and you’re forced to make support payments. The first thing you’ll be asking me is, “are they deductible?” Well, just like your relationship, it’s complicated. That’s what The Tax Issue is here for.

There are two basic requirements before you even consider taking a deduction. First, the payments must be based on a written agreement or a court order. Second, they must be periodic payments. Lump sums or payments based on a mutual, non written understanding are not deductible.

Once you’ve passed these hurdles the rules are different depending on when your agreement or court order was signed. We’ll tackle them one at a time, but before we do, you should be aware of one more thing: any amount that is deductible to the payer is also taxable to recipient.

Written Agreement or Court Order After April 1997

If your document is dated after April, 1997, only payments made in support of your spouse (or common law partner) are deductible. Child support is not.

Your agreement must clearly specify which payments are exclusively for spousal support. If no mention is made of the purpose of the payments, they are deemed to be for child support and are not deductible.

Payments made to a third party qualify as long as they are for the benefit of your spouse and he or she has control over them. For example, if a court order specifies that payments are to be made to a landlord for your spouse’s rent, it must also be made clear that your spouse may at any time have those payments made to her instead if he or she so desires.

If you qualify for a deduction under the above rules, you must register your agreement or court order with the CRA by filing form T1158.

Written Agreement or Court Order After April 1997

If your document is dated prior to May, 1997, then payments for spousal support and child support are deductible.

However, if the agreement was amended after April, 1997 and the amount of child support payments is modified, then you fall into the new rules, and they will no longer be deductible.

You can also choose, if your spouse agrees, to have the new rules apply to make the payments non-deductible (and non-taxable to the recipient) by filing an election on Form T1157.

Those are the basic rules. If you need more information, try the CRA guide P102. That should answer most of your questions.


This is the first instalment of a regular feature on The Tax Issue where you ask the questions and I offer an incredibly coherent and entertaining answer. This week, the topic is marriage  breakdown and the equivalent-to-spouse credit.

The Tax Issue:

Upon the breakdown of a marriage, who is eligible to claim an equivalent-to-spouse credit for a child that lives with both parents on a regular basis throughout the year?

The Answer:

This is a question that comes up on a regular basis, and the answer is a bit complicated.

First, let’s look at who can claim the equivalent-to-spouse credit. You must fall into one of the following categories at any time in the year:

  1. You must be unmarried and not in a common-law relationship; or
  2. You are married or in a common-law relationship, but did not support or live with your spouse or partner and your spouse or partner did not support you.

Now, let’s look at who would be the subject of the claim. The person must be someone who lives with you and is:

  1. Resident in Canada (except in the case of your child)
  2. Wholly dependent on you for support
  3. Related to you (we’re talking immediate family)
  4. Except in the case of a parent or grandparent, under 18 years of age, or dependent on you by reason of mental or physical infirmity.

Now that we’ve covered the basics, let’s get down to the actual question. Let’s assume we are talking about a child under 18, the parents separate in the year and the father immediately begins making non-deductible support payments pursuant to a court order or written agreement.

Essentially, the answer depends on whether we are in the year of the breakup or a subsequent year.

In the year of breakup:

In this year, either parent who qualifies can claim the deduction in respect of the child, but they cannot share the credit. So, if the child normally lives with both parents (shared custody), then they must agree as to who will take the credit in respect of the child. If they can’t agree, then neither one gets the claim.

If there are two children, and each spouse wishes to make a claim for one child, this might be possible, but each parent would have to prove that their respective child lived with them and was wholly dependent on them for support at some time in the year.

After the year of breakup:

In any subsequent year, the person required to make child support payments (whether or not the payments are actually made) is not entitled to the claim. So, in our example, the mother would be the only person eligible to make the equivalent-to-spouse claim in respect of the child.

If no support payments are being made, or they are paid but are not required under a written agreement or court order, then the above restriction does not apply, and either parent can make the claim, as long as they meet the criteria set out above.