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 What are 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 What are 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 (see line 25600).

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

  • The other country withheld tax from the support payments you reported as income.
  • You have to pay tax on those payments on your tax return.

For more information, see line 40500.

Example – Spousal support from a resident of another country

Carol and Doug divorced on December 9, 2019. 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, 2020.

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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