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: Two married individuals ("Individual A" and "Individual B") entered into a separation agreement in XXXXXXXXXX . Subsequently, in XXXXXXXXXX , they entered into an amending agreement in which it was acknowledged that Individual B needed and was entitled to spousal support and that Individual A would pay Individual B the monthly sum of $XXXXXXXXXX (indexed annually) in that regard. We have been asked whether Individual A is entitled to deduct the monthly payment under paragraph 60(b) of the Income Tax Act.
Position: It appears that the payments are deductible.
Reasons: The available information indicates that monthly payments qualify as "support amounts" described in paragraph 14 of IT-530. We also indicated that if there was a particular concern with the conditions set out in paragraph 14 of IT-530, the local TSO should be contacted.
XXXXXXXXXX 2001-008262
M. Eisner, CA
June 19, 2001
Dear XXXXXXXXXX:
Re: Spousal Support
This is in reply to your letter of April 25, 2001, concerning the above-noted subject.
Your submission included a separation agreement dated XXXXXXXXXX (the "Separation Agreement") with respect to yourself ("Individual A") and XXXXXXXXXX ("Individual B") and an agreement entered into in XXXXXXXXXX (the "Amending Agreement") that amended the Separation Agreement. The Amending Agreement provides that Individual B needs and is entitled to spousal support, and that, commencing in XXXXXXXXXX, Individual A is to pay Individual B the monthly amount of $XXXXXXXXXX for spousal support with the monthly amount being indexed in XXXXXXXXXX of each year with respect to the cost of living. The monthly amount will cease to be paid when either Individual A or Individual B dies. There are no children of the marriage.
You have asked us whether the payments of spousal support are deductible.
The Canada Customs and Revenue Agency's position on support payments is set out in Interpretation Bulletin IT-530, which has been enclosed.
The formula for the deduction of support payments under paragraph 60(b) of the Income Tax Act is set out in paragraph 14 of IT-530. In order for the monthly support amounts in your situation to be deductible under that formula, the payments need to satisfy the definition of "support amount" set out in paragraph 4 of IT-530. On the basis of the information you provided us, it appears that the monthly payments would meet those requirements. However, if you have a particular concern, you should contact your local Tax Services Office.
We trust that our comments are of assistance to you.
Yours truly,
Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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