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 $XXXXXXXXXX monthly spousal maintenance payment made pursuant to a spousal maintenance agreement, dated XXXXXXXXXX , is taxable in the hands of the recipient.
Position: Taxable/deductible.
Reasons: The agreement under the caption “spousal maintenance” reads, “XXXXXXXXXX This amount qualifies as a “support amount” and is clearly identified as spousal maintenance in the agreement.
XXXXXXXXXX 981265
A. M. Brake
July 24, 1998
DearXXXXXXXXXX:
Re: Spousal Maintenance Payments
This is in reply to your letter received in this office on May 14, 1998, inquiring as to whether a $XXXXXXXXXX monthly payment you expect to receive under a spousal maintenance agreement (the “Agreement”), dated XXXXXXXXXX, would be taxable. You indicated that the payment was probably a gratuity and that your former spouse has no legal obligation to pay you maintenance. A copy of the Agreement was forwarded for our reference.
It would seem that your inference of the payment being a gratuity is drawn from subparagraphs XXXXXXXXXX of the Agreement. We are not certain as to the purpose or intent of paragraph XXXXXXXXXX of the Agreement, but, in our view, section XXXXXXXXXX of the Agreement, entitled SPOUSAL MAINTENANCE, obligates your former spouse to make the $XXXXXXXXXX monthly payments. This section reads as follows:
XXXXXXXXXX
Also, paragraph XXXXXXXXXX of the Agreement, under the heading RELEASES AND FURTHER ASSURANCES, states that the “XXXXXXXXXX”.
Subsection 56.1(4) of the Income Tax Act defines support amount to mean “an amount payable or receivable as an allowance on a periodic basis for the maintenance of the recipient, children of the recipient or both the recipient and children of the recipient, if the recipient has discretion as to the use of the amount, and the recipient is the spouse or 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 receivable under an order of a competent tribunal or under a written agreement; ... .”
In our view, the $XXXXXXXXXX monthly payment falls within the definition of support amount. Since the Agreement clearly identifies the $XXXXXXXXXX monthly payment as being solely for your support, the amount is taxable in your hands in the year received.
We trust our comments will be of assistance to you.
Yours truly,
Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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