Is this guide for you?

This guide is for you if, under a court order or a written agreement, you are in either of the following situations:

• You made support payments.
• You received support payments.

If you do not have a court order or written agreement, the payments are not subject to the tax rules that apply to support payments.

This guide gives information on:

• the different tax rules for an order or agreement made before May 1997 or after April 1997
• the exceptions that may apply to you
• how to fill out your tax return

Definitions

Allowance – is a specific sum of money established in a court order or written agreement. It states the amount the payer has to pay to the recipient. It can include a sum that has to be adjusted based on a formula or index (such as the cost-of-living index or a percentage of the payer’s income), even though the exact future amounts are not specified in the order or agreement. An allowance must be payable on a periodic basis to be considered support payments.

Child – a child can be one of the following:

• a person, born within or outside marriage, of whom you are the natural parent
• a person who is wholly dependent on you for support and of whom you have (or, immediately before the person reached the age of 19, had) the custody and control
• the child of your spouse or common-law partner
• a spouse or common-law partner of your child

Common-law partner – this applies to a person to whom you are not married, with whom you are in a conjugal relationship, and to whom one of the following situations applies. They:

• have been living with you for at least 12 continuous months. This includes any period you were separated for less than 90 days because of a breakdown in the relationship.
• are the parent of your child by birth or adoption
• have custody and control of your child (or had custody and control immediately before the child turned 19 years of age) and your child is wholly dependent on that person for support

Court order – is a decree, order, or judgment made by a court or other tribunal, such as a family law court or other competent tribunal.

Payer – is a person who makes support payments to a recipient under a court order or written agreement. A payer can be one of the following:

• the recipient’s current or former spouse or common-law partner who is living separate and apart because of a breakdown in their relationship
• the parent of a child of whom the recipient is a legal parent

Periodic payments – the term “periodic” means there is a series of payments, but does not necessarily mean “frequent”. For example, the payments could be made monthly, quarterly, semi-annually, or annually. The court order or written agreement must set out the timing of the payments. Only a new order or agreement can change the payment schedule.

Recipient – is a person who receives support payments from a payer under a court order or written agreement. A recipient can be one of the following:

• the payer’s current or former spouse or common-law partner who is living separate and apart because of a breakdown in their relationship
• the parent of a child of whom the payer is a legal parent

A child cannot be considered the recipient of support payments for income tax purposes.

Separated – you are separated when you start living apart from your spouse or common-law partner because of a breakdown in the relationship for a period of at least 90 days and you have not reconciled.

Once you have been separated for 90 days (because of a breakdown in the relationship), the effective day of your separated status is the date you started living apart.

You would still be considered to have a spouse or common-law partner if there is no breakdown in the relationship and you were living apart for any of the following reasons:

• work
• studies
• health problems

Written agreement – under a written agreement, a person agrees to make regular payments to support their current or former spouse or common-law partner, children of the relationship, or both. The written agreement should be signed and dated by both parties.

What are support payments?

A support payment is an amount payable or receivable as an allowance on a periodic basis for the support of the recipient, children of the recipient, or both.

There are 2 types of support payments:

• spousal support
• child support

The tax rules are different depending on the type.

Spousal support is to support a spouse or common-law partner as states in a court order or written agreement. The support payments are made only to support the recipient.

Child support is to support a child, or a child and a spouse or common-law partner, as stated in a court order or written agreement. The support payments are not only made to support the recipient.

Support payment conditions

Your payment is considered a support payment if the following 5 conditions are met:

1. The payment is a specific amount made to the recipient according to a court order or written agreement.

   Note
   A written paternity agreement is not valid on its own, even if it is registered with the court. Paternity agreements must be a court order issued by a court or tribunal in accordance with the laws of a province.

2. If the recipient is the payer’s current or former spouse or common-law partner, the payer is living separate and apart from the recipient at the time the payment is made because of a breakdown in the relationship. Otherwise, the payer must be the legal parent of a child of the recipient.
3. The payment is made to support the recipient, the child of the recipient, or both. The recipient can use the payment at their discretion.
4. The payments are payable on a periodic basis (see allowance and periodic payments). The timing of the payments must be set out in the court order or written agreement.
5. The payments are made to the recipient or to an agent enforcing the collection of the amount.

   Note
   Under certain conditions, payments can be made to a third-party. For more information, see Specific-purpose and third-party payments.

Exceptions

In certain situations, your payments are considered support payments even if they do not meet the above conditions. These situations may arise when any of the following situations apply. The payments are:

• made before the date of the court order or written agreement
• specific-purpose or third-party payments
• lump-sum payments

Payments made before the date of the court order or written agreement

An amount paid before a court order or written agreement takes place or comes into effect is recognized if the order or agreement states that any amount previously paid is considered paid and received under the order or agreement. However, the payments must be made in the year the order or agreement was made, or in the previous year.

Specific-purpose and third-party payments

Specific-purpose payments are amounts payable under a court order or written agreement for specific expenses (for example, rent) to support the recipient or the child in the recipient’s custody.

Specific-purpose payments include:

• rent, property taxes, insurance premiums
• educational or medical expenses (such as prescription drugs or eye glasses)
• maintenance costs for the home in which the recipient lives
• up to 20% of the original principal amount of any debt from buying or improving the home in which the recipient lives

If the recipient can use the specific-purpose payments as they see fit, they are considered support payments if they meet conditions 1, 2, 3 and 4.

However, if the recipient cannot use the specific-purpose payments as they see fit, they are not considered support payments, unless the court order or written agreement states that the recipient will include the payments in income, and that the payer can deduct them.

These amounts may be paid directly to the recipient or to a third party.

Third party payments are specific purpose payments made under a court order or written agreement to someone other than the recipient.

For more information, see Income Tax Folio S1-F3-C3, Support Payments.

Lump-sum payments

An amount paid as one lump-sum will generally not be considered a support payment because it is not paid on a periodic basis.

However, if periodic payments required by a court order or written agreement were overdue and one payment is made to bring them up to date, that payment would be considered a support payment.

Also, a lump-sum payment would be considered a support amount if it is paid under a court order clearly stating that retroactive support has to be paid for a specific period that happened before the court order.

The following are generally not support payments:

• a lump-sum payment made in place of several periodic payments that were required by a court order or written agreement, but were not yet due to be paid (a prepayment). However, the prepayment may be considered a support payment if it was made for the sole purpose of securing funds to the recipient
• a lump-sum payment made under a written agreement for a period before the date of the written agreement
• instalment payments of a lump-sum
• payments that release the payer from any obligation to pay overdue support amounts or future support, or both

For more information, see Income Tax Folio S1-F3-C3, Support Payments.

Are your payments considered support payments?

Answer a few questions to find out if the payments made or received are considered support payments.

What are the tax rules?

The tax rules that apply to your situation depend on whether your court order or written agreement was made either:

• before May 1997
• after April 1997

Tax rules for court orders or written agreements made before May 1997

Support payments for a child or spouse or common-law partner, under a court order or written agreement made before May 1997, are taxable to the recipient and deductible by the payer unless any of the following 4 situations applies.

1. Changes to the amount of child support payments

If a court order or written agreement made before May 1997 is modified after April 1997 to change the amount of child support payable to the recipient, the revised amount has to follow the tax rules in effect after April 1997. For more information, see Tax rules for court orders or written agreements made after April 1997.

2. A new court order or written agreement with the same person

The amounts under the original and the new court order or written agreement have to follow the tax rules in effect after April 1997 if all of the following apply:

• The original order or agreement was made before May 1997.
• The original order or agreement is still valid.
• The new order or agreement was made after April 1997 with the same person.
• The new order or agreement changes the total amount of child support payable.

The tax rules in effect after April 1997 apply to both orders or agreements, starting on the date specified in the new order or agreement or on the day it was made. For more information, see Tax rules for court orders or written agreements made after April 1997.

3. The court order or written agreement specifies that payments will not be taxable or deductible

A court order or written agreement may specify that child support payments made after a certain date will no longer be taxable and deductible. However, this date cannot be before May 1, 1997.

4. Election for child support payments

If you have a court order or written agreement dated before May 1997, you can choose to follow the tax rules in effect after April 1997 without having to change the order or agreement.

The payer and the recipient must both agree to this election. Both parties must complete and sign Form T1157, Election for Child Support Payments, and send it to us.

Once the election has been accepted, the order or agreement will follow to the tax rules that apply after April 1997. It cannot be reversed.

Tax rules for court orders or written agreements made after April 1997

Generally, child support payments made under a court order or written agreement made after April 1997 (or before May 1997 if one of the situations mentioned above apply) are not deductible by the payer and do not have to be included the recipient’s income. Spousal support payments continue to be deductible to the payer and must be included in the recipient’s income. The following explanations give more information about these rules.

Child support payments

Under court orders and written agreements made after April 1997, any support amount that is not stated in the order or agreement as being only for the support of the recipient is considered to be child support. These amounts are not deductible by the payer and do not have to be included in the recipient’s income.

Spousal support payments

Generally, support payments made under a court order or written agreement for the maintenance of the recipient are taxable to the recipient and deductible by the payer if both of the following situations apply:

• The order or agreement clearly states the amount to be paid for the spouse or common-law partner.
• All payments for child support are fully paid for the current and previous years.

For more information, go to Support payments.

Priority of child support

If your court order or written agreement specifies child support payments and support payments for the recipient, priority is given to the child support. This means that all payments made are first considered to have been made toward child support. Any amount paid over and above the child support amount is considered to be support payments for the recipient.

All child support payable to a recipient must be fully paid before any amounts paid as support for the recipient can be claimed as a deduction. Any overdue child support amounts are carried forward and added to the next year’s support payments.

For more information, see Income Tax Folio S1-F3-C3, Support Payments.

Child custody and the amount for an eligible dependant

Generally, if you are required to make child support payments to a current or former spouse or common-law partner for a child, you cannot claim an amount for an eligible dependant on line 305 of Schedule 1.

If you and another person each have a clearly established requirement under a court order or written agreement to make child support payments for a child, normally neither of you would be able to claim the amount for an eligible dependant for that child. However in this case, you may still be eligible to claim the amount for an eligible dependant, as long as you and the other person agree that you will make the claim. If you cannot agree, neither of you can claim an amount for an eligible dependent for that child.

One person paying child support

If you make child support payments for a child and the other parent does not, you cannot claim an amount for an eligible dependant for that child. Only the parent who does not pay child support can claim the amount for an eligible dependant on line 305 of Schedule 1 for that child.

More than one person paying child support

Change in custody

If there was a change in custody during a year and, as a result, you both were required to make child support payments at some point during the year, you have to agree who will claim an amount for an eligible dependent for that child. If you cannot agree who will claim the amount for the child, neither of you can make the claim.

Shared custody

If you and another person share custody of a child throughout the year, and you each have a clearly established requirement under a court order or written agreement to make child support payments for that child, normally, either of you would be able to claim the amount for an eligible dependant for that child. However, in this case, one of you may still be eligible to claim the amount, as long as you and the other person agree who will make the claim. If you cannot agree, neither of you can claim the amount for that child.

A court order or written agreement that calculates child support obligations based on a statutory scheme (such as The Federal Child Support Guidelines) does not necessarily establish a requirement for both parents to make child support payments for purposes of the Income Tax Act. Also, the fact that both parent’s income is used to calculate child support is not sufficient to establish a requirement that both parents make child support payments. Unless the order or written agreement clearly establishes that both parents are required to pay child support, only one parent is considered to be making child support payments. In this case, the payer cannot claim the amount for an eligible dependant, and the recipient may be able to claim the amount, provided they are otherwise eligible to claim the amount.

For more information about your eligibility to claim the amount for an eligible dependant, see line 305.

For more information on tax rules for support payments, see Income Tax Folio S1-F3-C3, Support Payments.

For more information about the Federal Child Support Guidelines and how to determine child support, see Child Support.

Filling out your tax return

Payer

If you are claiming deductible support payments, enter on line 230 of your tax return the total amount of support payments you paid under all court orders and written agreements. This includes any non-deductible child support payments you made. Do not include amounts you paid that are more than the amounts specified in the order or agreement, such as pocket money or gifts that you sent directly to your children.

Enter on line 220 of your tax return the deductible part of the support payments that you paid.

Make sure that both line 230 and line 220 are filled out correctly to avoid your claim being delayed or denied.

You also have to register your court order or written agreement with us. For more information, see Registering your court order or written agreement.

Year of change in marital status

If you had to make support payments for a child and you were separated from your spouse or common‑law partner for only part of that year because of a breakdown in your relationship, you have a choice. You may claim whichever of the following is more beneficial to you:

• any deductible support amounts paid for that year
• any applicable non‑refundable tax credit, if you qualify

You may be able to claim the total spousal support amounts paid for that year and any applicable non refundable tax credit for your children for which you qualify. However, you may only do so if you had to make spousal support payments and you were separated from your spouse or common law partner for only part of that year because of a breakdown in your relationship.

If you reconciled before the end of that year and you choose to claim the spouse or common‑law partner amount, you may also be able to claim line 326, Amounts transferred from your spouse or common-law partner, of Schedule 1.

For more information on non-refundable tax credits, see the Federal Income Tax and Benefit Guide.

If you are claiming non-refundable tax credit amounts instead of the support payments, enter the total support paid on line 230, and zero on line 220. Otherwise, we will have no record of your payments.

Retroactive lump-sum payments

You have to give to the recipient a filled out Form T1198, Statement of Qualifying Retroactive Lump-Sum Payment, if all the following situations apply:

• You made one lump-sum payment of at least $3,000.
• The lump-sum payment was made to bring the payments up to date.
• You can deduct the amount.
• The recipient has to report the amount as income.

For more information, see Lump-sum payments.

Reimbursement of support payments

If support payments received were reimbursed to you because of a court order, you may be able to claim a deduction on lines 156 and 128 of your tax return for the year it is received. It must be included in income if one of the following situations applies:

• You deduct the amount on that tax return.
• You deducted it in a previous year.

Legal and accounting fees

As the payer, you cannot claim legal and accounting fees on line 220, 221, or 232 incurred:

• to get a separation or divorce
• to establish, negotiate, or contest the amount of support payments
• to establish child custody or visitation rights

Supporting documents

When you file your tax return, do not send any documents. Keep them in case we ask to see them.

However, if we ask for receipts, acceptable receipts must state your name, the date of payment, and the amount you paid.

Any of the following documents may be accepted to support your claim:

• cancelled cheques or cheque images (copies of both sides of the cheque have to be legible)
• bank and employer statements if they show a transfer of funds from the payer’s account or paycheque to either the recipient’s account or to a provincial agency and the amounts are equal or less than the amounts specified in the court order or written agreement
• statement or letter from the maintenance enforcement program (for example, provincial agency) supporting the actual amount of support paid under the court order or written agreement
• signed receipts from the recipient showing the total amount paid in the year

Recipient

If you are reporting taxable support payments, enter on line 156 of your tax return the total amount of support payments you received under a court order or written agreement. This includes any support payments you received under a social assistance arrangement.

Do not include amounts you received that are more than the amounts specified in the order or agreement, such as pocket money or gifts that your children received directly from the payer.

Enter on line 128 the taxable part of support payments you received.

Make sure that both line 156 and line 128 are filled out correctly to avoid a delay in assessing your tax return.

You also may have to register your court order or written agreement with us. For more information, see Registering your court order or written agreement.

Retroactive lump-sum payment

If you received a lump-sum support payment, parts of which were for previous years, you have to report the whole payment in the year the lump‑sum payment is received.

However, you can ask us to tax the parts for the previous years as if they were received in those years if all of the following situations apply:

• The amount that applies to previous years is $3,000 or more (not including interest).
• You were resident in Canada.
• It is to your advantage for tax purposes.

The payer of the support payments should give you a filled out Form T1198, Statement of Qualifying Retroactive Lump-Sum Payment. Include this form with your tax return to ask for this special tax calculation on a retroactive lump-sumpayment. We will tell you the results on your notice of assessment or notice of reassessment.

Repayment of support payments

If you repaid support payments because of a court order, you may be able to claim a deduction on line 220 of your tax return for that year (or in either of the following two years). You can claim this deduction if both of the following situations apply:

• You reported the original support payments you received as income on that same tax return or on a previous year’s tax return.
• You have not already claimed a deduction for the repayment.

Legal and accounting fees

As the recipient, you can deduct, on line 221 of your tax return, legal and accounting fees incurred:

• to collect overdue support payments owing
• to establish the amount of support payments from your current or former spouse or common-law partner
• to establish the amount of support payments from the legal parent of your child (who is not your current or former spouse or common-law partner) where the support is payable under the terms of a court order
• to try to get an increase in support payments

You can also deduct, on line 232 of your tax return, legal and accounting fees incurred to try to make child support payments non-taxable.

As the recipient, you cannot claim legal and accounting fees incurred:

• to get a separation or divorce
• to establish child custody or visitation rights

Legal and accounting fees paid to collect a lump-sum payment are not deductible. The lump-sum also does not qualify as a support payment.

Have you transferred the rights to your support payments?

You may assign or transfer your rights to your support payments to your provincial government so you can receive social assistance. If you have transferred your rights to your support payments, report the total amounts you received on line 156 (and any taxable part on line 128). These amounts are not included in box 11 of Form T5007, Statement of Benefits.

Supporting documents

When you file your tax return, do not include your receipts or cancelled cheques, or your court order or written agreement. Keep them in case we ask to see them.

Registering your court order or written agreement

If your court order or written agreement includes a payment of spousal support, you must register it with us. This will allow us to verify the part of your payments that is spousal support and, if applicable, the part that is child support. You will also avoid unnecessary delays and adjustments to your tax return.

To register your court order or written agreement, follow the instructions on Form T1158, Registration of Family Support Payments. Do not include your order or agreement with your tax return.

Notify us if the spousal or child support payable changes (other than cost-of-living adjustments or changes already stated in the court order or written agreement).

Do not register your court order or written agreement if it requires child support payments only.

Deductions from your pay

Payer

If you are employed and you make deductible support payments, you can ask us to allow the reduction of the amount of income tax that your employer is deducting from your pay.

Send Form T1213, Request to Reduce Tax Deductions at Source, to your tax services office.

If you qualify, you can take our letter of authority to your employer to adjust the tax deducted from your pay.

Recipient

If you are employed and you receive taxable support payments, you may want to increase the amount of tax that is deducted from your pay.

To increase tax deducted from your pay, fill out Form TD1, Personal Tax Credits Return, and give it to your employer.

Payments made after death

Payments made after the death of the recipient are not deductible by the payer. Whether the payments are made to the estate or to the children, these payments would not meet the conditions of a support payment.

Payments made by the estate of a payer to the recipient are neither deductible nor taxable. The amounts do not meet the conditions of a support payment because an estate cannot have a spouse or common-law partner.

Payments to or from a non-resident

Payer

If you are a resident of Canada who makes support payments to a non-resident, you do not have to withhold tax on the payments. You can deduct the payments if the conditions are met.

Recipient

If you are a resident of Canada who receives support payments from a resident of another country, you have to include the payments in your income if the conditions are met.

However, your may be able to claim a deduction for the support payments you received. You cando so if the support payments you reported as income are tax-free in Canada because of a tax agreement (treaty) between Canada and the other country. For more information, see line 256 in the Federal Income Tax and Benefit Guide.

You may be able to claim a foreign tax credit if both of the following situations apply:

• The other country withheld tax from the support payments you reported as income.
• You have to pay tax on those payments on your tax return.

For more information, see line 405 in the Federal Income Tax and Benefit Guide.

Online services for individuals

The CRA’s online services are fast, easy, and secure!

My Account

My Account lets you view your personal income tax and benefit information and manage your tax affairs online. Find out how to register at My Account.

MyCRA mobile web app

The MyCRA mobile web app lets you access and view key portions of your tax information. You can use the app to make a payment to the CRA online with My Payment or a pre-authorized debit agreement, or create a QR code to pay in person at Canada Post. Access the app at Mobile apps.

Use My Account or MyCRA to:

• view your benefit and credit information
• view your notice of assessment
• change your address, direct deposit information, information about marital status, and information about children in your care
• register to receive email notifications when you have mail to view in My Account and when important changes are made on your account
• check your TFSA contribution room and RRSP deduction limit
• check the status of your tax return

In addition, you can use My Account to:

• view and print your proof of income statement (option ‘C’ print)
• send documents to the CRA
• send an enquiry about your audit
• link between your CRA My Account and Employment and Social Development Canada (ESDC) My Service Canada Account

Receiving your CRA mail online

Sign up for email notifications to get most of your CRA mail, like your notice of assessment, online.

For more information, go to Email notifications from the CRA.

For more information

What if you need help?

If you need more information after reading this guide, go to Support Payments or call 1-800-959-8281.

Forms and publications

To get our forms and publications, go to Forms and Publications or call 1-800-959-8281.

Electronic mailing lists

The CRA can notify you by email when new information on a subject of interest to you is available on the website. To subscribe to the electronic mailing lists, go to Subscribe to a list.

Tax Information Phone Service (TIPS)

For personal and general tax information by telephone, use our automated service, TIPS, by calling 1-800-267-6999.

Teletypewriter (TTY) users

If you have a hearing or speech impairment and use a TTY call 1‑800‑665‑0354.

If you use an operator-assisted relay service, call our regular telephone numbers instead of the TTY number.

Complaints and disputes

Service-related complaints

You can expect to be treated fairly under clear and established rules, and get a high level of service each time you deal with the CRA. See the Taxpayer Bill of Rights.

If you are not satisfied with the service you received, try to resolve the matter with the CRA employee you have been dealing with or call the telephone number provided in the CRA’s correspondence. If you do not have contact information, go to Contact Information.

If you still disagree with the way your concerns were addressed, you can ask to discuss the matter with the employee’s supervisor.

If you are still not satisfied, you can file a service complaint by filling out Form RC193, Service-Related Complaint. For more information and how to file a complaint, go to Make a service complaint.

If the CRA has not resolved your service-related complaint, you can submit a complaint with the Office of the Taxpayers’ Ombudsman.

Formal disputes (objections and appeals)

If you disagree with an assessment, determination, or decision, you have the right to register a formal dispute.

Reprisal Complaints

If you have previously submitted a service-related complaint or requested a formal review of a CRA decision and feel that, as a result, you were treated unfairly by a CRA employee, you can submit a reprisal complaint by filling out Form RC459, Reprisal Complaint.

For more information about complaints and disputes, go to Complaints, objections, appeals, disputes, and relief measures.

Link to Source:https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/p102/support-payments.html