When a written agreement or court order states that a parent is obligated to pay child support and spousal support, the law specifies that priority be given to the support for the child. In terms of taxes, that means the child support payments must be paid in full before the payer can claim a deduction for any amount paid.
Since April 1997, child support paid under a new written agreement or court order is not tax deductible by the payer, and the recipient of child support does not have to include the payments as taxable income. However, spousal support payments remain tax deductible by the payer, and the recipient of spousal support must report the payments as income.
When a former spouse or common-law partner is required to pay child and spousal support, the spousal support is essentially any support that is paid in addition to the amount of child support specified in the agreement or court order.
Also, the Canada Revenue Agency states that "any support amount that is not identified in the order or agreement as being solely for the support of the recipient is considered to be child support." Therefore, any such payments are not tax deductible by the payer.
Generally, for spousal support to be taxable and tax deductible by the respective parties, the written agreement or court order should specify the amount to be paid.
N.B. Canada Revenue Agency will not allow a retroactive tax adjustment for deduction of spousal support payments from the payor's taxable income unless the Order or Agreement is dated within the subsequent 2 calendar years. E.g., spousal support payments made in 2013 must be characterized as such by Order or Agreement no later than December 31, 2015, in order for the payor to claim the deduction from his or her income.
The family lawyers of Kirk Montoute LLP help spouses in Calgary reach fair and appropriate support agreements. To learn more about these matters, please see our overview of the factors influencing spousal support.