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Divorce and Money Matters Can be Taxing

Published: April 11, 2014

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Divorce and Money Matters Can be Taxing

The process of separation and divorce forces one to make what seems like an endless stream of decisions, many of which are fueled by emotions. At such a time, the need to make prudent tax and financial decisions often takes second place, leading many down a path where the financial impact of a separation and divorce can be devastating.

With careful thought and proper planning & analysis, however the financial impact in both the short and long term can be effectively managed. There are many financial and tax issues that need to be addressed and, with the tax deadline looming, these tips will focus on and assist you with the tax issues surrounding separation and divorce.

1. SUPPORT PAYMENT

i.          When are support payments deductible?
ii.         Child support payments
iii.        What is a child support payment?
iv.        Taxation of third-party payments

2. DIVISION OF PROPERTY

i.          Division of property on marriage breakdown
ii.         RRSP and pension assets

3. DEDUCTIBILITY OF LEGAL FEES

4. AFTER THE SEPARATION – WHO CLAIMS WHAT?

i.          Tax deductions for children – the “equivalent to spouse” deduction
ii.         Year of separation
iii.        Years after the year of separation

Obtaining professional advice is usually a good idea when dealing with tax matters. When those tax matters involve the end of a marriage, such advice is essential. The tax rules in this area, particularly those governing the taxation of support payments are, unfortunately, among the more complex in the Income Tax Act.

William Brian Cooke, CPA, CMA helps individuals as well as couples develop solutions that address a variety of personal financial issues. Bill can be reached at (416) 806-4961 or bill_cooke@rogers.com.

Written by Lisa Gelman

Senior Lawyer

Senior Lawyer Lisa Gelman has over 25 years of family law experience and founded Gelman & Associates to provide strategic legal counsel in family law matters concerning divorce, parenting, separation, and more.

Frequently Asked Questions - divorce & separation

If you are litigating your matter, social media posts made by your spouse or partner may be relevant, especially if they contradict what your spouse is claiming in his or her pleadings.

For example, if a spouse is claiming financial hardship, a Facebook post that shows that spouse going on an expensive trip or posing with an expensive car can undermine such claim  and, potentially affect that party’s credibility in court if presented as evidence on a motion or at trial.

Further to photograph-based posts, statements that are made on social media by one party can be relevant if said posts (i) are related to the litigation, to issues of parenting  and/or (b) they contradict statements that were made by the party in his or her pleadings. For example, if a party who is attempting to establish that he or she is an appropriate custodial parent, then recent social media posts about extensive partying and drug use made by that party may be relevant in court, as they may speak to that party’s fitness when it comes to appropriate supervision of a child in his or her care.

The Ontario Attorney General’s website estimates that divorce proceedings can take approximately four to six months to complete, provided that all documents have been appropriately accomplished and submitted on time.

No. The law does not favour mothers over fathers in divorce proceedings. The judge will base his decision on the evidence laid out by both parties.

The main distinction between divorce and separation is that divorce ends your marriage formally. You and your partner are no longer married.
If you’re separated, you’re still legally married to each other even if you receive a formal separation, and you must continue to record that you’re married on documents.

No. You are not required to get a lawyer for a divorce. However, it is best if you retain one to ensure that you fully understand all your rights and obligations.

A joint divorce application occurs when you and your spouse both agree to a divorce and on all other family law matters such as parenting, spousal support, or division of property.

Yes, it is different. Family law problems are addressed mainly by provincial laws in Ontario. Divorce law, on the other hand, is controlled by federal legislation in the form of the Divorce Act, which applies uniformly across the country.

Divorce can be a difficult decision to make, especially if you’re unsure if your partner will sign the petition. However, a divorce does not require your partner’s consent. Although it may be a long process if your partner doesn’t comply, they will not be able to stop you indefinitely.

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If you need legal advice regarding divorce & separation matters in Ontario, contact our Toronto family law lawyers for a free consultation. Some conditions may apply.

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