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Canada Marriage & Divorce Tax Guide

the marriage and the divorce tax rules in Canada. The spousal support (the "alimony" — the "support amount" paid to the spouse after the separation) — the payor deducts the spousal support from the income (the "deductible support" — the Form T1158), and the recipient includes the spousal support in the income (the "taxable support"). The child support — the payor does NOT deduct the child support, and the recipient does NOT include the child support in the income (the "tax-free child support" — the "no deduction / no inclusion" rule). The RRSP transfer on the marriage breakdown — the "RRSP split" (the "tax-free transfer" of the RRSP between the spouses under the "Division 6" of the ITA — the "RRSP division on the marriage breakdown" — the Form T2220). The TFSA transfer on the marriage breakdown — the "TFSA split" (the "tax-free transfer" of the TFSA between the spouses — the "qualifying transfer" through the financial institution). The CPP credit splitting — the "CPP division" (the "credit splitting" for the CPP contributions during the marriage — the "division of the unadjusted pensionable earnings" — the application to the Service Canada). The attribution rules on the marriage breakdown — the "cessation of the spousal attribution" — the attribution rules (the "spousal attribution" under s. 74.1) cease when the spouses are "separated and living apart" (the "marriage breakdown" — the "separation" — the "attribution cessation"). The common-law partner — the "common-law partner" definition (the individual who has lived with the taxpayer in the "conjugal relationship" for 12+ consecutive months).

Spousal Support (Alimony)

• Tax treatment: The spousal support (the "support amount" paid to the spouse after the separation) is deductible by the payor and is included in the recipient's income. The support must be paid under the "court order" or the "written agreement" (the "support order" or the "separation agreement").
• Form T1158: The "Support Payments Deduction" — the payor must file the Form T1158 with the tax return to claim the deduction. The CRA requires the support order or the separation agreement to be filed.
• Lump-sum support: The lump-sum spousal support (the "retroactive support" — the "arrears" payment) is deductible by the payor and is taxable to the recipient (the "lump-sum support" is treated as the "support payment" for the tax purposes).

Child Support

• Tax treatment: The child support is tax-free — the payor does NOT deduct the child support, and the recipient does NOT include the child support in the income. The child support is paid for the benefit of the children under 18 (the "eligible children" — the "child support" under the "Federal Child Support Guidelines").
• Child support vs spousal support: The child support is based on the "Federal Child Support Guidelines" (the "table amount" — the payor's income and the number of the children). The spousal support is based on the "Spousal Support Advisory Guidelines" (the "formula" — the payor's income, the recipient's income, the length of the marriage).
• Reciprocal child support: The "shared custody" (the "split custody" — the children live with both parents for at least 40% of the time) — the child support is calculated as the "set-off" (the difference between the two parents' table amounts).

RRSP/TFSA Transfer on the Marriage Breakdown

• RRSP transfer: The "RRSP split" under s. 146(16) of the ITA — the RRSP can be transferred between the spouses tax-free on the marriage breakdown. The transfer is made through the "RRSP transfer form" (the financial institution's "RRSP transfer" form — the "institution-to-institution" transfer).
• TFSA transfer: The "qualifying transfer" of the TFSA between the spouses — the transfer is tax-free and does NOT affect the TFSA contribution room. The transfer is made through the "TFSA direct transfer" form (the "TFSA transfer between the spouses" — the financial institution's form).
• CPP credit splitting: The "CPP division" — the spouses can split the CPP contributions earned during the marriage. The "credit splitting" allocates the CPP earnings (the "pensionable earnings") equally between the spouses (the "CPP credit split" — the application to the Service Canada).

Common-Law Partner

• Definition: The common-law partner is the individual who has lived with the taxpayer in the "conjugal relationship" for at least 12 consecutive months (the "12-month rule"). The common-law partner status begins after the 12-month period. The "break in the cohabitation" (the "separation" — the "end of the conjugal relationship") is the "cessation of the common-law status."
• Tax treatment: The common-law partners are treated as the "spouses" for the tax purposes — the same spousal attribution rules, the same spousal support rules, the same RRSP/TFSA transfer rules, and the same CCB and the GST/HST credit rules. The common-law partner must report the "marital status change" to the CRA.

For the income splitting and the attribution rules, see our Income Splitting Guide →. For the CCB and the child benefits for the separated parents, see our Child Benefits Guide →.