What is the most important tax impact resulting from divorce?
For many couples the most important taxation issue resulting from Divorce is in regards to Spousal Support. The payor of spousal support may deduct any spousal support paid from their income taxes while the recipient must add into their income and pay taxes any spousal support received. This does not apply to child support which is not tax deductible in any circumstances.
In cases where spousal support is not an issue but there is an equalization of net family property which includes a transfer of RRSPs or a matrimonial home it is important to note that these assets can be transferred tax free to a spouse in the event of a separation.