Is spousal support taxable?

Yes. According to the Income Tax Act spousal support, in the form of periodic payments, is taxable as income for the recipient spouse and deductible from the paying spouse’s income. (Unless the parties in a written agreement decide to make the periodic payments tax deductible for the recipient spouse.)

This does not apply if it is ordered to be paid as a lump sum or in the form of a transfer of property in satisfaction of the support obligation.

The courts must always keep this in mind when making a determination as to what type of order to grant because the recipient will need to be awarded enough support to cover the additional income tax that he or she will be required to pay as a result. (Or, the court may decide to order that the periodic payments be treated as tax deductible instead of accounting for the imposition of taxes in the amount that is to be paid.)