Payments to or from a non-resident

Payer

If you are a resident of Canada who makes support payments to a non-resident, you do not have to withhold tax on the payments. You can deduct the payments if the conditions outlined in Support payments are met.

Recipient

If you are a resident of Canada who receives support payments from a resident of another country, you have to include the payments in your income if the conditions outlined in Support payments are met.

However, you may be able to claim a deduction for the support payments you received. You can do so if the support payments you reported as income are tax-free in Canada because of a tax agreement (treaty) between Canada and the other country. For more information, see line 25600.

You may be able to claim a foreign tax credit if both of the following situations apply:

For more information, see line 40500.

Example – Spousal support from a resident of another country

Carol and Doug divorced on December 9, 2021. Doug lives in Australia. Carol is a Canadian resident. Under a court order, Doug paid Carol $500 a month in spousal support beginning January 1, 2022.

Under the terms of the Canada-Australia Income Tax Treaty, alimony and other support payments are only taxable in the source country. The payment is taxable only in Australia.

Carol must report $6,000 on lines 12800 and 12799 of her tax return. Carol may also claims $6,000 as a deduction on line 25600 because of the terms of the Canada-Australia tax treaty.

For tax treaty information, visit Tax treaties on the Department of Finance Canada website.

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