Principal Issues: How should spousal support amounts (or alimony) received by a Canadian taxpayer be reported when they are paid by a resident of Hong Kong subsequent to the signing of the Canada-Hong Kong Tax Agreement?
Position: Spousal support amounts received from a non-resident are to be included in income under paragraph 56(1)(b) of the Act and a deduction is permitted for that amount under subparagraph 110(1)(f)(i) as an amount exempt from income tax in Canada because of the Canada-Hong Kong Tax Agreement.
Reasons: Paragraph 4 of Article 20 in the Canada-Hong Kong Tax Agreement is the provision used for alimony and other maintenance payments. The phrase “that party” at the end of paragraph 4 of Article 20 in the Canada-Hong Kong Tax Agreement means the party where the payment originates.
