Why can't the CS payor claim it on Income tax?

[representingself]

Does anyone know why a child support payment is not a tax deduction on personal income tax, on behalf of the payor?

[AMNMP]

It used to be tax deductible, but no longer is. CRA says so...

[representingself]

Hey, thanks for the response

I understand that it used to be, but do you happen to know the explaination from the Government as to WHY it is no longer deductible??

[AMNMP]

Here is an example:

Child live's with mother, pays $1000/month rent, $50/month for the child to join a fitness program. Mother claims as a deduction on her income taxes.

Father pays $500/month child support, to help pay for expense which include rent.

Why would CRA allow you both to claim deductions for essentially the same expenses?

[AMNMP]

I have read a few of your posts and am interested in your thought's on my situation. See my thread "Help Help Help" Under Fiancial Issues, posted earlier this evening.

[representingself]

Originally Posted by AMNMP

Here is an example:

Child live's with mother, pays $1000/month rent, $50/month for the child to join a fitness program. Mother claims as a deduction on her income taxes.

Father pays $500/month child support, to help pay for expense which include rent.

Why would CRA allow you both to claim deductions for essentially the same expenses?

I understand that the Gov't wouldn't allow a double deduction, but child support payments aren't considered "income" on the receipents income tax.

[dinkyface]

After 1997, the govt decided that it is taxable in the hands of the payor (i.e. payor pays it in AFTER TAX $s), not in the hands of the payee (i.e. payee does not pay tax on the $s).
Just a tax grab - usually the payor has higher marginal tax rate, so the govt gets more $ this way.

[got2bkid]

I sent a letter to the goverment, asking this same question. The answer I got from the department of justice was that too many child support recipeints were complaining that at the end of the year they had to pay more taxes than expected because of the inflow of CS. The gov't decided to make the CS taxable to the payor, so that CS recipients wouldn't have a surprise tax bill at the end of the year.

They had planned to decrease CS amounts to reflect the taxes now paid by the payor (so if you owe 700 you have to earn 1000 to pay that) but they never did do THAT portion of the change. Instead, in 2006 they raised CS by about 30% for payors. That is why in the past it felt like alot of support recipients were getting the short-end of the stick. (they also like that support payors usually more more money than recipients, so gov't got more money in taxes when set up this way)

But in the last few years, with these changes, the payors are now hit financially much harder (plus the addition of section 7 extra-ordinary expenses and no review of CS plus "extras" and how that increases many payors obligations to levels barely sustainable). I think a lot of problems between CS payors and recipeints lie in the fact that:

a) some payors don't pay at ALL, and so the recipients have a very hard time and are very vocal with their problems

b) some payors pay full CS and almost FULL extras (when ex-wives don't work therefore don't contribute) these payors have 50% of net income taken and have a very hard time surviving and are vocal with thier problems

c) people in category a) don't realize people in category b) exist and vice-versa

d) the guidelines have become much more onerous for HONEST payors, but media and the general public still seem to focus on the "deadbeats" and make the guidelines more onerous for payors, but only the honest ones end up paying the extras to make up for those "deadbeats" who didn't and will never pay.

d) the two extremes have to realize problems with the guidelines affect both payors and recipients, and changes to the guidelines are needed.

[representingself]

Thanks G2B...