Summary
Financial circumstances almost always change as a result of a divorce. Inevitably, some expenses will no longer be shared, such as the roof over your head. These tax and benefit options can lighten your financial load.
Content
Financial circumstances almost always change as a result of a divorce. Inevitably, some expenses will no longer be shared, such as the roof over your head. These tax and benefit options can lighten your financial load.
Family Tax Benefit
Even if your spouse has main custodial duties, you may still claim a family tax benefit if you care for your children under 20 years of age for at least 35 percent of the time.[1]
Parenting Payment
You and your spouse may already be benefitting from this income support benefit, which you can claim for children younger than six years of age. If you are single, you can claim it for two more years, until the age of 8.[2]
Child Care Benefits and Rebate
If you can no longer juggle child care between you and your spouse, child care benefits can help±.[3] You may be eligible to receive assistance with child care payments, whether they are paid to a nursery school or a grandparent or friend.
Transfer of Assets
Dividing up the assets is the most complex part of a marriage dissolution. Fortunately, tax law makes it easy. Rollover relief is provided on most asset transfers. The recipient of the assets is only liable for capital gains taxes and losses upon future disposal.[4] Normally, you can acquire any capital gains benefits transferred from the spouse.
Summer Home
You may not be packing up for a weekend at the summer cottage quite as often following a divorce. Rental is a possibility for the time the cottage is no longer in use. For the time of year the cottage is rented out, you are entitled to deduct expenses, including on loans, maintenance and repair, and property insurance. On the other hand, if your summer home has become your main residence after the divorce, you are eligible to claim the full capital gains tax exemption on it. If you have two homes during your transition to single life, you generally have a six-month period to choose one as your principal residence.[5]
Employee Benefit Payments
If your spouse is still on your employment benefits plan but should no longer be, advise your employer to adjust your benefits and fees at your earliest convenience.
The legal bill, which can range from $200 to fill out forms to $10,000-plus for a contested divorce, is often the biggest divorce cost. Tax deductions for some legal expenses can lower your bill.