18 October 1993 External T.I. 9315335 F - Deductibility of Maintenance Payments

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.

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Attention:  XXXXXXXXXX

Dear Sirs:

RE:  Deductibility of Maintenance Payments

This is in reply to your letter of May 18, 1993 in which you requested our opinion on the deductibility of maintenance payments under the circumstances described in your letter and the divorce judgement submitted with it. We regret the delay encountered in providing you with a response.

The facts as we understand them are that your client,

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You have asked whether the payments made directly to the son after he reached the age of 18 are deductible to the father and, if so, who would be responsible for reporting the amounts as income.

Paragraph 60(b) of the Income Tax Act (the Act) provides that amounts paid to the former spouse for the maintenance of a child of the marriage are deductible to the payer, as long as the other criteria set out in that provision are met. These payments to the former spouse would continue to be deductible even though the child exceeds the age of 18 years. Where the payments are required to be paid directly to the child of the marriage rather than the spouse, the provisions of subsection 60.1(1) of the Act have application. This subsection provides, in part, that payments made to a third party (including the child) will continue to be deductible under paragraph 60(b) of the Act as long as the payments are for the benefit of the former spouse and/or children in the custody of that person. Whether or not a child is in the custody of a parent is a question of fact taking into consideration the circumstances and the relevant provincial legislation. It is generally considered, however, that custody continues until the child reaches the age of majority. The Department takes the position that, in the absence of evidence to the contrary, a child who has reached the age of 18 cannot be considered to be in the custody of a parent even though s/he may continue to be residing with the parent.

Consequently, in the circumstances of your client's case,

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We hope our comments will be of assistance to you.

Yours truly,

P.D. Fuoco for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch