28 September 2001 External T.I. 2001-0097525 - Support Amounts Paid by Non-Resident

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Does a person resident in Canada have to include support amounts received in his or her income if the payer is a non-resident that is not required to file an income tax return in Canada?

Position: Yes.

Reasons: Paragraph 56(1)(b) applies to the receipt of all support amounts.

XXXXXXXXXX . 2001-009752
M. P. Sarazin, CA
September 28, 2001

Dear XXXXXXXXXX:

Re: Inclusion of Alimony Payments in Income

This is in reply to your letter of August 15, 2001, requesting our views regarding the taxation of alimony payments received by a Canadian resident (the "Recipient") from his or her non-resident former spouse (the "Payer").

The Payer, a non-resident since XXXXXXXXXX, intends to remain a non-resident for the foreseeable future. The Payer has been paying alimony to the Recipient since XXXXXXXXXX and the Recipient has always included the amounts received in his or her income under the Income Tax Act (the "Act"). The Payer is now retired and has no other Canadian source income. Consequently, the Payer is no longer required to file an income tax return in Canada and, as such, will not be claiming a deduction for the alimony payments paid to the Recipient. The separation/divorce agreement provides that the alimony payments are to be reduced if the payments are not deductible by the Payer. You would like to know whether the Recipient has to include the alimony payments in income if the Payer is not claiming a deduction for the amounts paid.

Comments

Under paragraph 56(1)(b) of the Act, the Recipient is generally required to include any support amount (other than certain child support amounts) received in a taxation year in his or her income for that taxation year. The expression "support amount" is defined in subsection 56.1(4) of the Act. A support amount includes an amount received as an allowance on a periodic basis for the maintenance of the recipient, if the recipient has discretion as to the use of the amount, where the recipient is the former spouse of the payer, the recipient and payer are living separate and apart because of the breakdown of their marriage and the amount is received under a written agreement. Consequently, the amounts received by the Recipient would qualify as support amounts and the Recipient is required to include the amounts received in his or her income under paragraph 56(1)(b) of the Act. We have enclosed a copy of the Canada Customs and Revenue Agency (the "CCRA") Guide P102 entitled "Support Payments". Page 12 of the Support Payments Guide provides general information regarding payments to and from non-residents.

The CCRA has also provided general comments related to support payments in its Interpretation Bulletin IT-530 entitled "Support Payments". You can get a copy of IT-530 from your local tax services office or on the Internet at the following site - http://www.ccra-adrc.gc.ca/formspubs/menu-e.html. We note that the comments in paragraph 3 of IT-530 are not relevant because the amounts would be deductible by the Payer if the Payer had to file an income tax return in Canada.

We trust these comments will be of assistance.

Yours truly,

for Director
International and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch

Enclosure
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