Child/Spousal Support Amounts: Changing the Agreement

Posted on December 15th, 2025 in Domestic Tax

Couple sitting at desk signing paperwork. Women in suit pointing to areas of paper to sign.

Spousal support payments are generally taxable to the recipient and deductible by the payer. On the other hand, child support payments are neither taxable to the recipient nor deductible to the payer. Any support amount that is not identified in an agreement or order as being solely for spousal support is considered to be child support.

A July 16, 2025, Tax Court of Canada case considered the deductibility of $33,000 in support payments claimed as spousal support for 2019. The primary issue was the extent to which monthly payments of $8,000 made under a July 2019, consent order constituted deductible spousal support rather than non-deductible child support.

While the Minister had allowed a deduction of $3,500/month for January to June 2019, paid under a prior separation agreement that explicitly identified the amount as spousal support, it denied deductions for payments made in the latter half of 2019. The consent order that took effect on July 1, 2019, (which replaced the separation agreement), did not specify which portion of the $8,000 payment was exclusively for spousal support.

Taxpayer loses

Pursuant to the original separation agreement, $2,500 of each monthly payment was for child support. The taxpayer argued that the same amount of the revised $8,000 monthly payment would also be for child support, leaving the remaining $5,500 to be deductible as spousal support. The Court disagreed, noting that, since the consent order replaced the separation agreement and did not identify any portion of the $8,000 as solely spousal support, the payments were all child support and therefore neither deductible by the payer nor taxable to the recipient.

Ensure that the taxation of support payments under any support or separation agreement is clearly understood to avoid surprises and potential disputes at a later time.

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