Matrimonial Matters
A History of Helping Clients
Going through a marriage breakdown is an emotional time and then when you have to do with all the legal matter that a separation or divorce creates including your tax obligations it just creates additional stress. As a practicing Toronto Accountant for over 25 years I am well experienced in handling tax matters of this nature. There are many services as you will see below that I can provide for you.
Services I can perform for you:
Get your tax returns up to date and current
Change your marital status with Canada Revenue Agency
Can register support court orders or written agreement with Canada Revenue Agency
Can assist your lawyer in negotiations to evaluate the after tax cost of your divorce or separation settlement with your spouse.
Review your support and separation agreement and determine if it will allow you to deduct the spousal support paid.
Assist in the recommendation of which assets you wish to transfer for your equalization payment, when and how, to avoid, reduce or defer income taxes.
Marital Status
You have to inform Canada Revenue Agency if there is a change in your marital status in the year.
A spouse is a person to whom you are legally married.
Common-Law Partner is a person who is not your spouse and whom you are living in a conjugal relationship and at least one of the following situations applies. He or she
has been living with you in a conjugal relationship for at least 12 continuous months;
is the parent of your child by birth or adoption; or
has custody and control of your child (or had custody and control immediately before the child turned 19 years of age) and your child is wholly dependent on that person for support.
Child support payments (after April 30, 1997) are not deductible by the payer nor are they taxable to recipient, all support payments are “Child Support” unless clearly identified as spousal support.
Spousal Support
Recipient must be a spouse or former spouse of the payer
Parties must be living separate and apart
Payments must constitute and “allowance payable on a periodic basis”
Payments must be for the maintenance of the recipient or the children of the recipient
Recipient must have a discretion as to use of the amounts paid
Payments must be made pursuant to a court order or a written agreement
Must be identified as Spousal Support
Generally speaking periodic spousal support payments are taxable to the recipient and deductible to the payer.
Legal Costs
Legal costs incurred in establishing the right to spousal support amounts, such as the costs of obtaining a divorce, a support order for spousal support under the Divorce Act or a separation agreement, are not deductible as these costs are on account of capital or are personal or living expenses.
Legal fees incurred by a recipient spouse for the following reasons are deductible for tax purposes:
To enforce a pre-existing right to spousal support
To defend against a reduction in a pre-existing support
To obtain child support
If a court order or written agreement requires payment for support for a spouse or common law partner, it must be registered with Canada Revenue Agency. All of the information provided to you here may be quite daunting. I can assure you that I am able to get your taxes in order for you and relieve the stress that can come with this. Just fill out the form on the top right here and let’s arrange a FREE consultation to see where you stand with your taxes as they pertain to your separation or divorce.