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Difference between revisions of "Family Law Act Basics"
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→Are there tax consequences?
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There are tax consequences when spousal support is paid on a regular, repeating basis. Spousal support is tax neutral when it is paid as a single lump sum. | There are tax consequences when spousal support is paid on a regular, repeating basis. Spousal support is tax neutral when it is paid as a single lump sum. | ||
The recipient of regular payments of spousal support must declare the support received in their income tax return and pay tax on it, just as if the support payments were employment income. The payor can deduct the spousal support paid from their taxable income, | The recipient of regular payments of spousal support must declare the support received in their income tax return and pay tax on it, just as if the support payments were employment income. The payor can deduct the spousal support paid from their taxable income, in the same way that RRSP contributions can be deducted from taxable income. This usually means that the recipient has to pay tax at the end of the year while the payor gets a tax refund. | ||
Remember that taxes should be taken into account when figuring out spousal support. At a minimum, recipients should be reminded to put some money aside to pay their taxes. | Remember that taxes should be taken into account when figuring out spousal support. At a minimum, recipients should be reminded to put some money aside to pay their taxes. | ||