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Optimizing tax returns on first year of separation

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  • Optimizing tax returns on first year of separation

    Hello everyone. My first post, very long and specific… Perhaps someone has faced the same issue. Here it goes.


    - we separated in 2016, date of separation 1/January/2016
    - husband (me), has gross income of 112k and will pay child and spousal support to wife, whose income is 53k
    - we're still dealing with lawyers, but the Separation Agreement is imminent.
    - we have shared finances so far, and could deem support was paid for 2016 in SA if beneficial to both of us (effectively, this is what's been happening in 2016 whether cheques were exchanged or not)

    Other info:

    - CRA says here Line*303 - Spouse or common-law partner amount :
    "If you had to make support payments to your current or former spouse or common-law partner and you were separated for only part of 2016 because of a breakdown in your relationship, you have a choice. You can claim the deductible support amounts paid in the year to your spouse or common-law partner on line 220 of your return or an amount on line 303 of your Schedule 1, Federal Tax, for your spouse or common-law partner, whichever is better for you."

    "If you separated in 2016 because of a breakdown in your relationship and were not back together on December 31, 2016, reduce your claim only by your spouse's or common-law partner's net income before the separation. In all cases, enter in the "Information about your spouse or common-law partner" area on page 1 of your return the amount you use to calculate your claim, even if it is zero."


    - Since from the CRA info I can do whichever is better for me, in Schedule 5 am I allowed to "reduce your claim only by your spouse's or common-law partner's net income before the separation" which is one day of work (January 1st which was actually not a work day) and claim the entire $11,474 spousal amount on line 303 of my return? That's what the UFile software seems to be telling me to do.

    - Whatever I enter as support paid is not taken into account by the tax software unless the amount I enter is large enough to make it to my advantage to claim it (the software is aware of the CRA info, it seems)

    - I know my ex-wife would have to enter support received on lines 156 and 128 of her return and pay taxes on spousal support. Are we allowed to choose a very low amount of support of 2016 to take advantage of the "do whichever is better for you" situation? How low can we go? Do we have to deem that support was paid in 2016 since January 2nd? Or can we say it started in December? When we finally get the SA signed, on-going support will be around $30k a year (child and spouse)

    I obviously am looking to claim the full amount on line 303 and say that something like $100 was paid in total spousal support for 2016, which my ex-wife would then have to pay taxes on. Since our finances for 2016 were shared, we are splitting the tax refund we each get.

    Many thanks in advance for the help.
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