The answer is, it depends.
Child support is not taxable, and the payor does not benefit from a tax deduction for child support paid.
However, spousal support may be taxable.
If spousal support is received on a monthly basis, the recipient of the spousal support must declare the periodic payments received as income when filing annual tax returns. The recipient must pay tax on the total amount received during the year. The payor of the respective periodic monthly spousal support will benefit from a tax deduction for the amount paid during the year.
On the other hand, spouses may negotiate a one-time lump sum payment of spousal support in lieu of making on-going periodic payments. Where spousal support is received as a lump sum, it is treated like a windfall under the income tax act and not subject to tax. Accordingly, there is no corresponding tax deduction available to the payor when spousal support is paid as a lump sum. However, this should be taken into consideration when determining the appropriate amount of lump sum spousal support to be paid.
Tax treatment is just one of a number of factors that you will want to take into account when deciding how to best structure the payment of spousal support. If you are going through a separation or divorce and you think you are entitled to receive or required to pay spousal support, it is recommended that you consult with both a lawyer and a financial representative. Whether periodic monthly payments or a single large lump sum payment is ideal will depend greatly upon your personal situation and your financial circumstances.