Folks, just a reminder that the parties to a family law dispute, even with the assistance of an order of the Ontario Superior Court of Justice, cannot override the rules in the Income Tax Act respecting the taxation of support amounts.
See Welch v R, 2012 TCC 350, where Wyman Webb, TCCJ (as he then was), wrote:
[5] Clearly the Appellant was receiving an allowance payable on a periodic basis for her maintenance and the Appellant had discretion as to the use of such an amount. The definition of “support amount” and the requirements to include the support amount received in income do not provide an option for individuals to choose whether such amounts will be included in income or not. If an amount that the Appellant has received is a support amount (and not a child support amount) as defined in subsection 56.1(4) of the Act, the Appellant is required to include that amount in her income. Individuals cannot agree to exclude such amounts from income any more than they can agree to exclude other amounts that would be required to be included in income under the Act. The requirement to include support amounts in income can only be changed by Parliament—it cannot be changed by an agreement between the Appellant and her former spouse or by an Order of the Ontario Superior Court of Justice (regardless of when such Order was signed).
