27 June 1995 External T.I. 9503055 - ALIMONY AND MAINTENANCE

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:

whether an equalization payment under the Family Law Act of Ontario is deductible as alimony

Position TAKEN:

no. the equalization payment is a payment of capital under the division of assets required by the Family Law Act of Ontario and is not paid as alimony or other allowance for the maintenance or support of the spouse or former spouse, children of the marriage, or both

Reasons FOR POSITION TAKEN:

see above

		950305
XXXXXXXXXX	Sandra Short

June 27, 1995

Dear XXXXXXXXXX:

Re: Deductibility of an equalization payment as alimony

This is in reply to your enquiry of January 19, 1995 concerning the deductibility of an equalization payment as alimony or maintenance. We acknowledge receipt of a copy of the Ontario Court (General Division) judgment dated XXXXXXXXXX We apologize for the delay in responding to you.

You have queried whether you may deduct the sum of $XXXXXXXXXX which represents an equalization payment under the Family Law Act of Ontario and which is payable to XXXXXXXXXX your wife.

XXXXXXXXXX

We have been advised that the equalization payment or the remainder due thereunder has been or will be paid through periodic payments of $XXXXXXXXXX/month.

The terminology of the judgment is clear that the sum of $XXXXXXXXXX represents a payment of capital under the division of assets required by the Family Law Act of Ontario (FLA) and is not paid as alimony or other allowance for the maintenance or support of the spouse or former spouse, children of the marriage, or both. Under the FLA, the spouse whose net family property is the lessor of the two net family properties is entitled to a payment of one half of the difference between them ("equalization payment") upon the dissolution of the marriage. Clause 3 of the judgment provides for the payment of an amount in respect of "support" to your spouse. This is the amount you may ordinarily claim as a deduction on line 220 of your income tax return if paid during the year.

We trust our comments will be of assistance to you.

Yours truly,

J.A. Szeszycki
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch