Support Payments – Do They Include Interest

Cavanagh v The Queen, 2013 TCC 94

At issue was whether interest relating to support payments made to the taxpayer’s spouse was deductible.  The FCA held that interest amounts were not deductible, and said:

[3]               Mr. Cavanagh’s principal argument is that the interest payment meets the statutory definition of “support amount” in subsection 56.1(4) of the Income Tax Act. We do not accept this argument. In our view, the interest in issue does not meet a key element of the statutory definition of “support amount” because it is not an amount payable for the maintenance of the Mr. Cavanagh’s former spouse or his children. On the contrary, the interest is payable for an entirely different purpose, which is to compensate the recipient for the delay in the payment of court ordered support.