Is spousal support taxable income in Ontario?

The tax treatment of spousal support (also called alimony or support payments) under Canadian law is straightforward: periodic spousal support payments are taxable to the recipient and deductible by the payer, provided they meet specific conditions. This rule is set by federal law and applies equally to Ontario residents.

For payments to qualify for this tax treatment, they must be made under a court order or written separation agreement, be periodic (not a single lump sum), and paid to a current or former spouse or common-law partner who is living separate and apart from the payer. Both parties must be living separate and apart from each other.

Lump-sum support settlements paid all at once generally do not qualify for the deduction/inclusion treatment and are neither deductible nor taxable. Child support payments made under orders or agreements made after May 1, 1997 are not deductible by the payer and not included in the recipient's income — child support is treated differently from spousal support. Because tax consequences can be significant over time, anyone negotiating a separation agreement should have a lawyer who understands both family law and the tax implications of different payment structures.