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TaxRobin, Senior Tax Advisor
Category: Canada Tax
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Experience:  More than 20 years tax expertise
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Attn Canadian Tax Professionals Re: lump sum spousal support

Customer Question

Attn Canadian Tax Professionals Re: lump sum spousal support and tax deduction In lieu of retroactive and future support payments my former spouse and I agreed on a lump sum. I am unable to determine if this is deductible in the year it was paid as it
a very large amount. The CRA is suggesting it is not, which appears to contradict the fact that spousal support is a legitimate deduction on T1 line 220
Submitted: 1 year ago.
Category: Canada Tax
Expert:  TaxRobin replied 1 year ago.


It is true that an amount paid as one lump-sum will generally not be considered a support payment because it is not paid on a periodic basis.

Sometimes a lump sum amount that is paid to bring a payer out of arrears is allowed for deduction.

Generally a prepayment is not support. A lump-sum payment made in place of several periodic payments that were imposed under a court order or written agreement, but were not yet due to be paid is a prepayment.

A payment that releases the payer from any obligation to pay arrears, future maintenance, or both is not support.

Spousal support is a deduction but the definition of what is support is crucial.