Is Spousal Support Taxable or Tax-Deductible in BC?

Spousal support affects your taxes as well as your budget. Whether you pay it or receive it, the way it is reported to the Canada Revenue Agency (CRA) can change what you owe, so it helps to understand the rules before the first payment is made.

This article explains the general tax treatment of periodic spousal support, the lines on the tax return that matter, and the situations where the usual rules do not apply. Your own situation may have details that change the result, so a tax professional or lawyer can confirm how this applies to you.

This article covers the law of British Columbia.

The basic rule: deductible for the payer, taxable for the recipient

In general, support paid under a court order or written agreement is deductible for the person paying it and reported as income by the person receiving it. The spouses must be living separate and apart because of the breakdown of the relationship.

The payer reports the total support paid under the order or agreement on line 21999 and claims only the deductible part on line 22000. The recipient reports the taxable support received on lines 12799 and 12800.

What counts as a support amount

The Income Tax Act defines a support amount as an allowance paid on a periodic basis for the recipient's maintenance, which the recipient can use at their own discretion. It must be payable under a court order or written agreement.

For orders or agreements made after April 1997, the commencement day is the day the order or agreement is made. Under the Family Law Act, spouses can include former spouses, so support can be claimed after the relationship has ended.

When the usual tax treatment does not apply

• No court order or written agreement: the tax rules do not apply, the payer cannot deduct the payments and the recipient does not report them.
• Payments beyond what the order or agreement requires do not qualify.
• The order or agreement must be registered with the CRA.
• Child support under orders made after April 1997 is not deductible by the payer and not taxable to the recipient.
• Legal and accounting fees for separation, divorce, or setting or contesting support amounts are not deductible on lines 22000, 22100 or 23200.

Informal arrangements are the most common trap. Money sent regularly without an order or written agreement may feel like support, but it does not get this tax treatment.

Catch-up payments and Form T1198

Sometimes support is paid late and a lump sum brings it up to date. A payer who makes a lump-sum payment of $3,000 or more to bring support payments up to date, and who can deduct it, must give the recipient Form T1198 when the payment is reportable income to the recipient.

How a one-time lump-sum award is taxed is a separate question that depends on the details, so check with the CRA or a tax professional before relying on any assumption.

Getting valid documentation, and what to do next

Because the tax treatment depends on a court order or written agreement, the paperwork matters. Under the Family Law Act, a written support agreement can state when support changes or ends, and a written agreement filed in court is enforceable as an order. A filed agreement can be enforced through the BC Family Maintenance Agency or by court application.

• Confirm you have a court order or a written agreement, not just an informal arrangement.
• Check that the order or agreement is registered with the CRA.
• Pay only what the order or agreement requires if you want the payments to qualify.
• Keep records of every payment, and separate child support from spousal support.
• Ask a lawyer or tax professional how your wording and any lump sum will be treated before you file.

Frequently asked questions