Family support payments are meant to help you and/or your child financially for a period of time. Both spousal and child support payments must be made under a court order or written agreement, but while spousal support is meant to be used only by you, child support doesn’t need to be used only by your child. Should the order or agreement provide for a global amount of support to be paid for the recipient and a child, the full amount is considered support for a child.
A payment is considered to be a support payment if:
- Payments are made under the terms of a court order or written agreement which is registered with the Canada Revenue Agency (CRA)
- You, the recipient, are the payer’s current or former spouse/common-law partner, and you were living separately 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 recipient
- The payment is made for the maintenance of the recipient, child of the recipient, or both, and they can decide how to use it
- The allowance is payable on a periodic basis, which will be set out in the court order or written agreement
- Payments are made directly to the recipient (child support can’t be made to the child)
What support payments can I claim on my return?
Your spousal support payments will always be taxed as income, and they’ll always be deductible for the payer, regardless of when your order or agreement was made. If you receive or make support payments but you do not have a court order or written agreement in place, the payments cannot be deducted by the payer and the recipient does not have to report payments received on their tax return. For more information, refer to the CRA website.
How your child support payments are taxed will be based on whether your court order or agreement was made before May 1997 or after April 1997.
If your court order or written agreement was made before May 1997, you (the recipient) will need to pay taxes on your support payments unless:
- There were changes to the amount of child support payments after April 1997, in which case the tax rules in effect after April 1997 apply. This means these payments are no longer taxable or deductible beginning on the date of the change.
Note: Automatic changes in the amount of support, due to an increase in the cost-of-living or changes in income, aren’t included in this rule.
- You have a new court order or written agreement with the same person made after April 1997 (but still have a valid order or agreement made before May 1997), and the new order changes your child support payments. The tax rules in effect after April 1997 will apply to both orders/agreements.
- The court order or written agreement specifically says your payments won’t be taxable or deductible (but this can’t apply to payments made before May 1, 1997).
- You elected to have the tax rules in effect after April 1997 apply to your court order or written agreement made before May 1997, without having to change it.
If your court order or written agreement was made after April 1997, you (the recipient) won’t have to include child support payments in your income and they won’t be deductible for the payer.
Retroactive lump-sum support payments
In some cases, you might receive retroactive lump-sum support payments. If you do and a portion of it was from a previous year, you’ll need to report the whole payment in the year it’s received.
If you’re receiving over $3,000 from previous years, you can ask for those years to be taxed as if you were reporting them in the year that they’re from. You can do this for any years you were a Canadian resident if it’s to your advantage.
Remember to get a completed T1198: Statement of qualifying retroactive lump sum payment from the person making support payments to you. Since retroactive lump sum payments require a special tax calculation, you’ll need to mail this form to the CRA once you receive it.
If you’re a resident of Québec and you received spousal and/or child support payments, the same rules that govern family support payments and retroactive lump-sum support payments for other Canadian residents apply to you as well.
Where do I claim this?
Follow these steps in H&R Block’s 2017 tax software:
- Under the PREPARE tab, click the OTHER icon. You’ll find yourself here:
- Under the OTHER SITUATIONS heading, select the checkbox labelled, Spousal or child support indicating that you received support payments in 2017 then click Continue.
- When you arrive at the page for Spousal or child support payments received, enter your information into the tax software.