Divorce settlements can be tricky things when it comes to taxes. In Canada, family law governs divorce issues, but it’s the tax man, also known as Revenue Canada, that makes the rules regarding the money that comes from a divorce settlement. It all depends on how the money is or has been paid out.
When it comes to property, cash given for a matrimonial home is neither taxable nor tax deductible. Support funds made in entirely one payment are also neither taxable nor tax deductible. Whatever the couple agrees to should be formally written into a separation agreement that should be looked over by each party’s independent legal counsel.
A legal separation agreement will stipulate such areas as safe from taxation and which aren’t. Provinces and territories have their own laws when it comes to dividing marital or family property or the equalization of it. Not all provinces have the same laws, so contacting a lawyer will help to clarify what is what when it comes to the division of assets and whether tax rules apply.
A family law lawyer in Canada is well aware of the legalities that accompany divorce issues such as separation agreements and the taxation of settlement funds. A lawyer can help his or her client to understand the complex details of any divorce documents including a those regarding any divorce settlement such as a separation agreement. It is important to understand the workings of such documents since they help people to continue on living separate lives. A lawyer may also be able to refer a client to others in a position to help such as a divorce financial analyst.
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