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Posts from the ‘Tax Implications’ Category

When am I considered not “married” for income tax purposes?

For income tax purposes, you are no longer “married” if you and your spouse have been living separate and apart for a period of 90 days or longer. The stage of your legal separation or divorce proceeding in which you are in does not matter, provided the 90 days’ separation is met.

The Canada Revenue Agency (CRA) requires you to update your marital status as soon as the 90 days has passed since you began living separate and apart from your spouse. You may update your marital status online, over the... MORE »

Are my legal fees tax deductible?

In some cases, legal fees are deductible. For example, legal fees that are paid to pursue child or spousal support are deductible from the recipient spouse’s income.

The Income Tax Act specifically allows that for the purposes of determining taxable income, a person can deduct any legal and accounting fees (which the legislation collectively calls “professional fees”) that are incurred in the pursuit of a claim for child or spousal support. These professional fees must be deducted in the year during which they are paid. In this way, by deducting those... MORE »

How are child support payments taxed?

Parents who receive child support payments are not required to include those payments in their taxable income. Payor parents are not permitted to deduct these child support payments from their taxable income.

The result of this rule is that parents who receive child support payments are able to spend more of their support payments on their children.

There is an exception to this rule if your child support arrangements were made prior to April 30, 1997. If you have an old agreement that was made before 1997, you can elect to have... MORE »

I’m getting divorced. How does this affect my taxes?

If you and your spouse have agreed to spousal support payments or have a court order in respect to spousal support, it is important to understand a few things.

Firstly, the spouse paying support is allowed to deduct the amount they pay in spousal support from their income taxes. Secondly, the spouse receiving support is required to add this amount to their total income, as well as pay taxes on the amount received.

However, child support does not fall under these rules, and is never tax deductible.

Finally, if your divorce includes an... MORE »

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... MORE »