What is Your Spousal Payments Doing To Your Taxes?

If you are in the situation where you are either receiving spousal payments or making them you may not know what your tax obligations are when it comes to Canada tax. Your circumstances will determine what this is. If you have not made any written agreement or are not making payments because of a court order then you cannot claim this on your tax. The same applies if you are receiving spousal payments.


If you are separated or divorced it is really important that you have your personal taxes done correctly and it can be especially important within the year either one of these situations take place. Make sure you seek out a reliable Toronto accountant to help you with this task.


Also, you need to realize that there are two categories of support payments which are the spousal support which is paid to the spouse and then there is child support that is paid to the spouse in most cases but the monies is to be used for the benefit of the children.


What is written in the actual court order is very important and this is another reason why you want an accountant to assist you with your tax return. For example, in the court order an amount of money ordered to be paid may not specifically dictate that it is for spousal or child support. In this case this is considered a global amount for payments and for CRA purposes it is deemed as being considered support for the child.


Caution must be taken when the order comes in the form of a paternity agreement, and the tax approach for this is considered on its own merit.


Basically there are 5 qualification steps that must be met for a payment to be considered a support payment. There are some exceptions to these for example, in some cases payments that were made even prior to the court order may also be deemed as support payments for tax purposes. Plus, payments made to a third party may also qualify depending on the circumstances.


There are other financial issues that can come with a separation and/or divorce and this just adds to the important of using a Toronto accountant. It is an unfortunate circumstance to be in but getting your tax obligations in order for the year of break up and for future years is something that you will have to do.


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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

Telephone: (416) 398-1700
Fax: (416) 398-6226

Chartered Professional Accountant, Chartered Accountant, Licensed Public Accountant


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