Lump-sum payments
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Lump-sum payments
An amount paid as one lump-sum will generally not be considered a support payment because it is not paid on a periodic basis.
However, if periodic payments required by a court order or written agreement have fallen into arrears and one payment is made to bring these requirements up to date, that payment would be considered a support payment.
The following are generally not support payments:
- a lump-sum payment made in place of several periodic payments that were imposed under a court order or written agreement, but were not yet due to be paid (a prepayment). However, if a prepayment was made for the sole purpose of securing funds to the recipient, it may be considered a support payment
- a lump-sum payment made under a written agreement for a period before the date of the written agreement
- instalment payments of a lump-sum
- payments that release the payer from any obligation to pay arrears, future maintenance, or both
For more information, see Income Tax Folio S1-F3-C3, Support Payments.
Example – Lump-sum payments
Jason and Tracy have been living separate and apart since August 2014. Their court order requires Jason to pay $500 per month for Tracy's maintenance. In June 2015, Jason lost his job and was unable to make the spousal support payments. In February 2016, he got a new job. He is in arrears of $4,000. Jason and Tracy returned to court and reached a settlement where it was agreed that Jason will pay $3,500 of the $4,000 he owes. The other $500 will not be paid.
The $3,500 lump-sum payment is considered a settlement amount paid by Jason to release him from his liability for the arrears and therefore, does not qualify as a support payment because it was not made in accordance with the original agreement.
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- Date modified:
- 2017-01-03