21 May 2002 External T.I. 2002-0135225 - CHILD SUPPORT

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 CCRA.

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

Principal Issues: Whether child support payments would continue to be deductible by a taxpayer.

Position: No.

Reasons: Since child support would have ceased under the taxpayer's first child support agreement on XXXXXXXXXX , this agreement would have to be varied or a new agreement would have to be made in order to establish child support after this date. Accordingly, there would be a "commencement day."

XXXXXXXXXX 2002-013522
J. Gibbons, CGA
May 21, 2002

Dear XXXXXXXXXX:

We are replying to your letter dated February 15, 2002, in which you requested our views about the income tax consequences of anticipated changes to your child support agreement. Our comments are of a general nature only since we cannot confirm the tax implications of particular transactions unless the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular IC 70-6R4.

You describe the following situation:

? Pursuant to a separation agreement ("the original agreement") dated XXXXXXXXXX, you are required to pay spousal and child support of $XXXXXXXXXX and $XXXXXXXXXX respectively.

? Your children XXXXXXXXXX were born on XXXXXXXXXX and will attain the age of majority pursuant to British Columbia (BC) law on XXXXXXXXXX.

? Under the original agreement, you are required to pay child support for each child until she marries, becomes self-supporting, ceases to reside with your ex-spouse, or attains the age of majority, whichever comes first.

? You anticipate that one of your daughters (your "particular daughter") will continue to be dependent on your ex-spouse for support, even after she reaches the age of majority, for medical reasons. If this is the case, she will continue to be considered a "child of the marriage", as that term is defined in the Divorce Act of BC, and you will be required to continue to pay child support for her.

In the event that child support continues for your particular daughter, as described above, you enquired as to whether:

1. The payments would continue to be deductible by you for income tax purposes?

2. The payments would be taxable in the hands of the particular daughter or your ex-spouse if the answer to question 1 is yes?

3. The XXXXXXXXXX payment would be deductible by you given that the particular daughter attains the age of majority on XXXXXXXXXX

Our comments

In our view, child support payments would not continue to be deductible by you, nor included in your ex-spouse's income. (See paragraph 2 of IT-530, "Support Payments", which is available on our website at www.ccra-adrc.gc.ca.) However, the XXXXXXXXXX payment would continue to be subject to the old rules, i.e., it would remain deductible by you and includable in your ex-spouse's income.

We trust that these comments will be of assistance.

Yours truly,

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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