Child/Spousal Support and CRA

Periodic child support payments, unlike spousal support, are made in Ontario on a tax-neutral basis. This means that they do not form part of the income of the recipient and are not deductible to the payor. 

The preceding statement must be approached with some caution because there are some payments made by parents, effectively being child support, which do have tax consequences. For example, daycare expenses can have tax consequences to the payor, and favourably so. Depending on the age of the child, either all or some of those expenses may be deductible for tax purposes. Again, depending on the child's residential arrangements, a parent may deduct those expenses (while the other parent does not) and in such a case, the deduction may affect the way the amount owing by the non-deducting spouse is calculated in the first place. By way of a simple example, if the annual cost of daycare is $5,000, in calculating at what proportion the parents will share the expense, one must consider which parent will take the tax deduction and in what amount.

Periodic spousal support, on the other hand, is taxable as income in the hands of the recipient and tax-deductible to the payor. A different tax treatment applies to lump sum spousal support payments.