An amount paid as one lump-sum will generally not be considered a support payment because it is not paid on a periodic basis.
Also, a lump-sum payment would be considered a support amount if it is paid under a court order clearly stating that retroactive support has to be paid for a specific period that happened before the court order.
The following are generally not support payments:
- a lump-sum payment made in place of several periodic payments that were required by a court order or written agreement, but were not yet due to be paid (a prepayment). However, the prepayment may be considered a support payment if it was made for the sole purpose of securing funds to the recipient
- a lump-sum payment made under a written agreement for a period before the date of the written agreement
- instalment payments of a lump-sum
- payments that release the payer from any obligation to pay overdue support amounts or future support, or both
For more information, see Income Tax Folio S1-F3-C3, Support Payments.
Example – Lump-sum payments
Jason and Tracy have been living apart since August 2017. In their court order, Jason has to pay $500 per month for Tracy’s support. In June 2018, Jason lost his job and was unable to make the spousal support payments. In February 2019, he got a new job. He owes $4,000 in support payments. Jason and Tracy returned to court where it was agreed that Jason will pay $3,500 of the $4,000 he owes. The other $500 will not be paid. The $3,500 lump-sum payment has released Jason from his obligation to pay these overdue amounts. The lump-sum payment does not qualify as a support payment because it was not part of the original agreement.
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