Spousal support is taxable as income for the recipient spouse and deductible from the paying spouse’s income. However, the paying spouse should be careful when claiming spousal support payments as a deduction.
First, spousal support should be paid pursuant to the Court order or a written agreement. Second, the paying spouse should not only report support payments on the tax return, but should also register the court order or the written agreement with the Canada Revenue Agency. The second step is usually overlooked or unknown by the paying spouses.
In order to register a court order or a written agreement, the paying spouse who wants to deduct the spousal support payments should fill out the Form T1158 – Registration of Family Support Payments. A copy of the completed Form T1158 and a copy of the court order or a written agreement should be sent to the tax centre. In Ontario, the Tax Centre is located in Sudbury, Ontario at the Sudbury Tax Centre (Post Office Box 20000, Station A, Sudbury ON P3A 5C1).