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 income if the conditions outlined in What are support payments? are met.

However, 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, you may be able to claim a deduction for them (see line 256).

If the other country withheld tax from the support payments you reported as income, and if you have to pay tax on those payments on your tax return, you may be able to claim a foreign tax credit (see line 405).

Example
Carol and Doug divorced on December 23, 2010. Doug resides in Australia. Carol is a Canadian resident. Under a court order, Doug pays Carol $500 a month in spousal support beginning January 1, 2011.

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

Carol must report $6,000 on lines 128 and 156 of her income tax and benefit return. Carol may also claim $6,000 as a deduction on line 256 of her tax return because of the provisions of the Canada-Australia Income Tax Treaty.

Forms and publications

• Guide P102, Support Payments
• IT530, Support Payments