Federal and provincial laws recognize that marriage is an economic partnership. When dealing with assets and various support payments upon break up or dissolution of this partnership, special family, economic and income tax issues arise.

The tax treatment with respect to spousal and child support is handled differently and must be carefully considered when negotiating terms of separations. Tax consequences vary depending on the nature of the payment and its frequency. Beyond the tax treatment of support payments, there are also considerable tax implications associated with the disposition of matrimonial property, RRIFs and other transferred property.

Tax credits, deductions and benefits are important considerations and must be handled with care. Some of these income tax benefits we handle include the Spousal Credit, Eligible Dependant Credit, Adoption Credit, Children’s Fitness Tax Credit, Child Tax Credit, Child Care Expense Deduction, Canada Child Tax Benefit Payments, Universal Child Care Benefit and Tuition, Education and Textbook Credits.

We handle a range of complex tax-related family applications.

How is spousal support taxed?

Generally, payments made in a particular calendar year will be deductible from the income of the payor if they contain certain prescribed features. As the payor, it is tax favorable to ensure your payments meet the criteria to be deductible.

Is child support taxed?

Generally, when child support is paid pursuant to a court order or agreement commencing after April 30, 1997, child support paid will not be deductible by the payor nor taxable to the recipient.

What are some tax implications when transferring property?

Transfer of capital property is often required when settling martial property disputes. In certain circumstances, the federal and provincial governments have not imposed taxes on these transfers. There are a number of provisions in the Income Tax Act which permit separating spouses to transfer the tax cost associated with a particular asset to the spouse who ultimately disposes of the property.

Some of the capital property transfers we handle include the matrimonial home, marketable securities, cottages, RRSPs, RRIFs, rental properties and other investments. We have extensive knowledge governing the tax treatment of these types of transfers.

What is income attribution?

The Income Tax Act has a series of attribution rules. These rules may attribute income previously ascribed to a particular spouse without regard to the actual ownership of the property.  In other words, even though one spouse might own a particular property, the income from the property or capital gain on its sale may be allocated to the other spouse for income tax purposes.

The rules of attribution can be applied to income from transferred property and capital gain income arising on the sale of transferred property. We handle several complex family tax issues, depending on the level of analysis required, we also work closely with accountants and forensic auditors.

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