Taxes When You Separate or Divorce

Once you separate, your tax return and your benefit payments both change, and the wording of your separation agreement can decide who pays tax on support. Family law questions belong with a lawyer. The tax side is below.

When the CRA treats you as separated

For a common-law couple, the Income Tax Act treats you as still being partners until you've lived separate and apart for at least 90 days because the relationship broke down. Most of the separation rules below also depend on you living separate and apart because of a breakdown of the marriage or partnership.

Tell the CRA about a change in marital status once it applies. If you have separated, the CRA asks you to wait until you have been apart for at least 90 days before you tell them; other changes can be reported as soon as they happen. Most changes can be made online in your CRA account. Your Canada child benefit and the Canada Groceries and Essentials Benefit (formerly the GST/HST credit) both depend on your marital status and your family's income, and an unreported change in marital status is one of the reasons the CRA gives for stopping Canada child benefit payments.

Spousal support and child support

The tax treatment depends on who the money is for.

• Spousal support is generally taxable to the person who receives it and deductible for the person who pays it. To count, it has to be paid as an allowance on a periodic basis, the recipient has to be free to use it as they choose, you have to be living separate and apart because of the breakdown, and it has to be paid under a court order or a written agreement.
• Child support under an agreement or order made after April 1997 is neither taxable to the recipient nor deductible for the payer. Older agreements can come under the same rule if they were changed after April 1997 to vary the child support.
• If the agreement or order doesn't say a payment is solely for the support of the spouse or partner, it's treated as child support. The wording matters.

Payments made before the order or agreement is signed can count, but only if the order or agreement says so, and only for amounts paid in that year or the year before. If you pay deductible support, you claim it on lines 21999 and 22000 of your return.

Splitting RRSPs

Property in an RRSP can be transferred directly to an RRSP or RRIF of your current or former spouse or common-law partner without either of you paying tax on it at the time. You have to be living separate and apart, and the transfer has to be made under a court order or a written separation agreement that divides property between you to settle rights arising from the relationship or its breakdown. The amount isn't included in either person's income, and no one gets a deduction for it.

Transferring other property

When you transfer capital property to a former spouse or common-law partner to settle rights arising out of the relationship, and you're both resident in Canada, it generally moves at your cost. No gain is triggered for you, and your former partner takes over your cost. You can elect on your return for that year to have this rule not apply. A later sale is taxed under the usual capital gains rules.

The family home

A family can designate only one property as its principal residence for a given year. For years after 1981, the family includes your spouse or common-law partner and your unmarried children under 18. Your spouse stops counting once they have lived apart from you for the whole year and are separated under a court order (judicial separation) or written separation agreement. Until then, if each of you keeps or buys a home, only one of the two can be designated for that year.

Benefits after you separate

• Canada child benefit. Payments are based on adjusted family net income and recalculated every July. With shared custody, each parent gets 50% of what they'd get with full custody, worked out on their own adjusted family net income.
• Canada Groceries and Essentials Benefit. The CRA recalculates it when your marital status changes. For July 2026 to June 2027, the maximum is $679 for a single person and $890 for a couple, plus $234 for each eligible child under 19.
• To keep getting either one, you have to file a return every year. For the Canada child benefit, a new spouse or partner has to file too.

How we help

"What happens to the numbers if the family changes shape?" is one of the questions we sit down with clients on, and marriage separation planning is part of our consulting work. We read the numbers, explain what they mean for the decision in front of you, and show our reasoning. We also prepare the personal tax returns for the year you separate and after, and we're happy to help with the government forms that come with it.