What’s in this article?
- What is this?
- Am I eligible?
- Canada Revenue Agency (CRA) says…
- Revenu Québec says…
- Where do I claim this?
- Where can I learn more?
Alimony (spousal support) and child support payments are amounts received as an allowance on a periodic basis for the maintenance of you and/or your child. Spousal support or alimony are payments made under a court order of written agreement that are only for the recipient’s maintenance. Child support are support payments that are not identified in the court order or written agreement as being only for the recipient’s maintenance.
Support payments you received in the year may be taxable based on the type of support payment and whether your court order or written agreement was made before May 1997 or after April 1997. Generally, support payments received under a court order or written agreement after April 1997 that are not identified as being solely for the support of the recipient are considered child support payments. These amounts do not have to be included in the recipient’s income. Spousal support made under a court order or written agreement are taxable to the recipient if the order or agreement specifies the amount to be paid for the spouse or common-law partner and all payments for child support are fully paid for current or previous years.
If you received support payments such as alimony or child support, some or all of the support payments you received may be taxable. A payment is considered a support payment if the following five conditions are met:
- Payments are made under the terms of a court order or written agreement.
- The recipient is the payer’s current or former spouse/common-law partner and living separate and apart at the time the payment was made because of a breakdown in the relationship. Otherwise, the payer must be the legal parent of a child or the recipient.
- The payment is made for the maintenance of the recipient, child of the recipient, or both and the recipient can decide how to use the amount received.
- The allowance must be payable on a periodic basis. The timing must be set out in the court order or written agreement.
- Payments are made directly to the recipient (child support cannot be made to the child).
Canada Revenue Agency (CRA) says….
The rules that apply to your situation depend on whether your court order or written agreement was made before May 1997 or 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 one of the following four situations applies to you.
- 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 tax rules in effect after April 1997 apply. This means that these payments are no longer taxable or deductible beginning on the date of the modification, which is the date that the payer pays the revised amount to the recipient for the first time.
Note: Automatic changes in the amount of support, based on cost-of-living increases or changes in the payer’s income, that have been provided for in the order or agreement are not included in this rule.
- A new court order or written agreement with the same person – If you have a court order or written agreement made before May 1997 that remain valid and a new order or agreement with the same person was made after April 1997, and the result of this new order or agreement is to change the total amount of child support payable to the recipient, the tax rules in effect after April 1997 apply for support payable or receivable both orders and agreements as of the commencement day of the new order or agreement.
- 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 (not earlier than May 1, 1997) will no longer be taxable and deductible.
- If you have a court order or written agreement dated earlier than May 1997, you can elect to have the tax rules in effect after April 1997 apply to you without having to change the order agreement.
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 any other situations mentioned above apply) are not deductible by the payer and do not have to be included in income by the recipient. Spousal support payments continue to be deductible to the payer and must be included in the recipient's income.
Retroactive Lump-Sum Payments
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, if the amount that applies to previous years is $3,000 or more (not including interest), you can ask us to tax the parts for the previous years as if they were received in those years.
We will do this for the amount that applies to years throughout which you were resident in Canada, and only if it is to your advantage for tax purposes.
The payer of the support payments should give you a completed Form T1198, Statement of Qualifying Retroactive Lump Sum Payment. Include this form with your income tax and benefit return to ask us for this special tax calculation on a retroactive lump sum payment. We will tell you the results on your notice of assessment or notice of reassessment.
Revenu Québec says…
Child support is taxed differently from support paid to a spouse or a former spouse.
As a rule, child support awarded pursuant to a judgment rendered or a written agreement entered into after April 30, 1997, is tax-neutral. This means that the debtor of support is not required to deduct the support from his or her income, and the creditor of support does not have to add the support amount to his or her income. Support payments for spouses or former spouses must be taxed even if they were established or modified after April 30, 1997. The debtors must, therefore, deduct the payments from their income and the creditors must include them in their income.
If you received a retroactive support payment in the year and at least $3000 of that payment applies to previous years, you can request Revenu Québec to determine if it would be to your advantage to average that portion of the payment. Revenu Québec will calculate income tax payable on that portion of the payment as if you received it in the previous years in question and deduct it from your income tax payable for the current year.
Follow these steps in H&R Block’s tax software to file your 2015 taxes:
- Click the PREPARE tab.
- Click the OTHER icon. You will find yourself here:
- Under the SPECIAL SITUATIONS section, select the checkbox labelled Alimony or child support payments received.
- Scroll to the bottom of the page and click Continue.
When you arrive at the page for Alimony or child support payments received, enter your information into the tax software.
- Support payments (CRA website)
- Line 142 – Support payments received (Revenu Québec website)
- Line 443 – Special taxes (Revenu Québec website)