Canada Revenue Agency
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Specific-purpose and third-party payments
Answer a few questions to find out if the specific-purpose payments made are considered support payments.
Third-party payments are support payments made under a court order or written agreement to someone other than the recipient (a third-party). Third-party payments are considered support payments only if they meet conditions 1, 2, 3 and 4 outlined in What are support payments? and if the recipient can use them as he or she sees fit. For more information, see Interpretation Bulletin IT530, Support Payments.
Specific purpose payments are amounts made under a court order or written agreement for specific expenses for the maintenance of the recipient. These amounts may be paid directly to the recipient or to a third-party.
Specific-purpose payments include:
- rent, property taxes, insurance premiums;
- educational or medical expenses (such as prescription drugs or glasses);
- maintenance costs for the home in which the recipient lives; and
- up to 20% of the original principal amount of any debt from buying or improving the home in which the recipient lives.
However, if the recipient cannot use the specific-purpose payments as he or she sees fit, they are not considered support payments, unless the court order or written agreement states that the recipient will include the payments in income, and that the payer can deduct them.
Example
Under a written agreement, Melissa has to pay $900 per month to her former spouse, Alex, as an allowance for maintenance. This written agreement provides that Melissa will pay an amount of $300 directly to Alex and $600 directly to his landlord for the rent of his apartment. The agreement also provides that Alex may, at any time, change the arrangement and require that the entire $900 be paid directly to him.
The monthly amount of $600 paid directly to the landlord and the monthly amount of $300 payable to Alex are considered support payments because he can use the money as he sees fit.
