When separating spouses negotiate support arrangements, their primary focus often rests on fairness, affordability, and long-term sustainability. However, recent jurisprudence from the Tax Court of Canada demonstrates the significant consequences that can arise from overlooking the tax treatment of such payments. Two decisions— both involving the same taxpayer, Dr. Rajat Vohra— underscore the importance of precision in drafting support agreements and court orders when deductibility is at stake.
Under the Income Tax Act, spousal support payments are deductible to the payor and taxable to the recipient, provided they are made pursuant to a written agreement or court order that clearly identifies the payments as being solely for the support of the former spouse. Child support, by contrast, is neither deductible nor taxable. In instances where the agreement or order is silent on the allocation of support, or if amounts are not explicitly designated as spousal support, the payments are presumed to be child support pursuant to subsection 56.1(4) of the Act.
In the first case, Vohra v. The King, 2022 TCC 165 (CanLII), decided in December 2022 and reported in the Financial Post by Jamie Golombek, Dr. Vohra claimed a $42,000 deduction for spousal support payments made in the 2018 taxation year. These payments were made under a 2011 separation agreement which he had prepared with his former spouse. The agreement provided for $3,500 per month in spousal support, terminating on December 8, 2014. Despite this termination date. Dr Vohra continued making monthly payments through to mid-2019.
The Canada Revenue Agency denied the deduction, asserting there was no valid agreement in place in 2018. Justice MacPhee of the Tax Court disagreed. While the 2011 agreement contained flaws— most notably, unwitnessed signatures and a handwritten clause ring the agreement subject to legal approval that was never obtained— the court found that it nonetheless constituted a written agreement. The judge accepted that both parties had consistently acted in accordance with the agreement well beyond its stated expiry. This continued performance evidenced a shared intention to remain bound by its terms. The court concluded that the payments were made pursuant to a written agreement and thus satisfied the requirements of the Income Tax Act. The deduction was allowed.
The second decision, Vohra v. The King, 2025 TCC 93 (CanLII), issued in 2025 by Justice Spiro and also covered by Golombek, addressed Dr. Vohra’s attempt to deduct $33,000 in support payments made during the latter half of 2019. In July of that year, the Ontario Superior Court of Justice issued a consent order requiring Dr. Vohra to pay $8,000 per month in temporary support. The order expressly deferred the determination of whether the payments constituted spousal or child support pending income verification.
Dr. Vohra took the position that, based on his historical support obligations, $5,500 of the monthly amount should be treated as spousal support. However, the court rejected this argument. Justice Spiro found that the consent order did not designate any portion fo the support as being solely for the former spouse. In the absence of such identification, the payments were deemed to be child support in accordance with subsection 56.1(4). As a result, they were not deductible. The judge emphasized that the Tax Court could not infer or impose an allocation that the family court order had deliberately left unresolved.
These two decisions present a compelling juxtaposition. In the 2018 case, the court was willing to accept an imperfect but consistently followed agreement as sufficient to ground deductibility. In contrast, the 2019 ruling demonstrates the limitations of relying on historical arrangements when a new, formally issued order fails to meet the statutory requirements for spousal support identification.
The key takeaway for family law practitioners and their clients is clear: agreements and court orders must explicitly identify the spousal support component if the payor intends to claim a tax deduction. Ambiguity, deferral of allocation, or reliance on past practice may not withstand scrutiny from the Canadian Revenue Agency or the courts. Even where parties act in good faith, the failure to adhere to the technical requirements of the Income Tax Act can result in substantial financial consequences.
For those currently negotiating or revising support arrangements, these decisions serve as a timely reminder to seek integrated legal and tax advice. A single missing clause can have a material impact on a party’s tax position, and once an order is issued, it may be too late to correct the oversight.
For more information on how recent Tax Court decisions like Vohra v. His Majesty the King may affect your separation agreement or support obligations, contact Russell Alexander Collaborative Family Lawyers. Our team can help ensure your agreement is drafted with both legal enforceability and tax efficiency in mind.
Cases Cited
Vohra v. The King, 2022 TCC 165 (CanLII)
Vohra v. The King, 2025 TCC 93 (CanLII)
