Keith Mack
The Canada Revenue Agency (CRA) considers a couple to be in a common-law relationship if they have lived together for 12 continuous months, share a child by birth or adoption, or if one partner has custody and control of the other partner's child. This definition varies from province to province. For example, in Ontario, a couple must have lived together for three years to be considered common-law, unless they have children, in which case the requirement is one year. In British Columbia, the threshold is two years. The CRA treats common-law couples similarly to married couples for tax purposes, which means they have access to specific tax benefits, credits, and deductions that are not available to single individuals. However, there may be disadvantages to filing as common-law, as the CRA combines family income when determining eligibility for certain benefits.
| Characteristics | Values |
|---|---|
| Definition of common-law relationship | Living in a conjugal relationship with someone who is not your married spouse |
| Conditions | Living together for at least 12 continuous months, sharing a child by birth or adoption, or having custody and control of a child who is wholly dependent on one partner for support |
| Tax benefits | Income splitting, combined deductions and credits, Canada Child Benefit (CCB), Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit |
| CRA's treatment of common-law couples | Similar to married couples for tax purposes, with access to specific tax benefits, credits, and deductions |
| CRA's definition | A couple is considered common-law if they have lived together for 12 months in a row or if they are the parents of a child by birth or adoption |
| CRA's separation criteria | Once a couple has been living apart for 90 days due to a breakdown in the relationship, they are considered separated |
| CRA's notification requirement | Individuals must update their relationship status with the CRA within the month following the change |
| CRA's combination of family income | The CRA combines the family income of common-law couples to determine eligibility for benefits |
| CRA's impact on benefits | The CRA's definition of a common-law relationship impacts eligibility for benefits such as the GST/HST credit, Canada Child Benefit, eligible dependent credit, and Guaranteed Income Supplement and Allowance |
| CRA's disclosure requirement | Individuals must disclose their relationship status and information about their partner when filing their tax return |
| CRA's consequences for non-compliance | Reassessment, payment of interest and penalties on unpaid taxes, denial of CPP and other pension survivor benefits |
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What You'll Learn
Common-law relationship definition
The Canada Revenue Agency (CRA) considers a couple to be in a common-law relationship if they meet at least one of the following conditions: living together for at least 12 continuous months, sharing a child by birth or adoption, or having custody and control of a child who is wholly dependent on one partner for support. It is worth noting that the definition of a common-law relationship may vary across different provinces in Canada. For example, in Ontario, a couple is considered common-law after three years of living together (or one year if they have children), while in British Columbia, the threshold is only two years.
The CRA treats common-law couples similarly to married couples for tax purposes, which offers certain tax benefits, credits, and deductions that are not available to single individuals. However, there may also be disadvantages to filing as common-law instead of single. For example, the CRA combines the family income of common-law couples, which may affect eligibility for certain benefits. Therefore, it is important to disclose your relationship status and information about your partner when filing your tax return. Failure to do so may result in reassessment, and you may be required to pay interest and penalties on unpaid taxes, or be denied CPP and other pension survivor benefits.
In the context of a relationship breakdown, it is important to understand how the CRA defines separation. If a couple has been living apart for 90 days due to a breakdown in the relationship, they are considered separated by the CRA. Until this 90-day threshold is reached, they are still considered common-law, even if temporarily separated. Once a couple is considered separated, they should update their relationship status with the CRA through their online accounts.
While the CRA has specific definitions and requirements for common-law relationships, it is important to note that the legal definition of a common-law relationship may vary across different provinces in Canada. These definitions can impact areas such as income tax filing, government benefits, and other legal rights and obligations. Therefore, it is always advisable to consult official government sources or legal professionals for the most accurate and up-to-date information regarding common-law relationships in a specific province or territory.
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Tax benefits
The Canada Revenue Agency (CRA) treats common-law couples similarly to married couples for tax purposes. This means that common-law couples can access specific tax benefits, credits, and deductions that are not available to single individuals.
The CRA combines the family income of common-law couples to determine eligibility for benefits such as the GST/HST credit, the Canada Child Benefit, the eligible dependant credit, and the Guaranteed Income Supplement and Allowance. This may impact your eligibility for certain programs.
Some tax benefits of being in a common-law relationship include income splitting, where the overall tax burden can be reduced by splitting income between spouses. Common-law couples can also combine deductions and credits, such as spousal amount, medical expenses, and charitable donations, to maximize tax savings.
If you have children, you can increase your benefits based on combined income, especially if one spouse has a lower or no income. Additionally, child care expenses may be deductible from your income when filing your tax return.
It is important to note that the definition of a common-law relationship varies across different provinces in Canada. According to the CRA, a couple is considered to be in a common-law relationship if they have lived together for 12 continuous months, share a child by birth or adoption, or if one partner has custody and control of the other partner's child and the child is wholly dependent on them for support.
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Tax credits
The Canada Revenue Agency (CRA) treats common-law couples similarly to married couples for tax purposes. This means that common-law couples have access to specific tax benefits, credits, and deductions that are not available to single individuals. However, there may be disadvantages to filing as common-law versus filing as a single person. For example, the combined family income may affect eligibility for certain benefits.
The CRA combines the family income of common-law couples to determine eligibility for benefits such as the GST/HST credit, the Canada Child Benefit, the eligible dependant credit, and the Guaranteed Income Supplement and Allowance. The definition of a common-law relationship varies from province to province. For example, in Ontario, it is three years (or one year if you have children), but the threshold is only two years in British Columbia.
According to the federal definition of common-law marriage, you are considered to be in a common-law relationship if you have lived with your partner for at least 12 continuous months, you share a child by birth or adoption, or your partner has custody and control of your child and your child is wholly dependent on them for support. It's important to note that even if you were separated for less than 90 days due to a relationship breakdown, you are still considered common-law. Only when you've been living apart for 90 days are you considered separated.
When filing taxes, it is crucial to disclose your relationship status and information about your partner. Failure to do so may result in reassessment, and you may be required to pay interest and penalties on unpaid taxes. Additionally, you may be denied CPP and other pension survivor benefits. By understanding the requirements and benefits of filing as a couple, taxpayers can strategically plan their taxes, potentially reducing overall tax liabilities and maximizing their benefits.
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Tax deductions
The Canada Revenue Agency (CRA) treats common-law couples similarly to married couples for tax purposes, which means that they have access to specific tax benefits, credits, and deductions that are not available to single individuals. However, there may be disadvantages to filing as common-law instead of as a single person. For example, the combined family income may impact eligibility for certain benefits.
The CRA combines the family income of common-law couples to determine eligibility for benefits such as the GST/HST credit, the Canada Child Benefit (CCB), the eligible dependant credit, and the Guaranteed Income Supplement and Allowance.
There are several tax deductions available to common-law couples. Firstly, the spouse with the higher income can maximise deductions to reduce paying taxes at a higher rate. Secondly, income splitting can reduce the overall tax burden by splitting income between spouses. Thirdly, combined deductions and credits can be used to maximise tax savings by combining or transferring credits such as the spousal amount, medical expenses, and charitable donations.
Additionally, if you have children, you can potentially increase your benefits based on combined income, especially if one spouse has low or no income. For example, if you or your spouse spends money on childcare, it may be possible to deduct some of those expenses from your income when filing your tax return. However, with certain exceptions, the person with the lower income must claim the childcare expenses.
It is important to note that the definition of a common-law relationship may vary across different provinces in Canada. For instance, in Ontario, it is defined as three years of living together, or one year if the couple has children, while in British Columbia, the threshold is only two years.
To summarise, while there are tax deductions available to common-law couples, it is important to carefully consider the potential advantages and disadvantages of filing as common-law versus single to ensure compliance with CRA requirements and maximise tax benefits.
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Eligibility for government benefits
The Canada Revenue Agency (CRA) considers a couple to be in a common-law relationship if they have lived together for 12 continuous months, share a child by birth or adoption, or if one of the partners supports the other's child. The CRA treats common-law couples similarly to married couples for tax purposes, which means that they have access to specific tax benefits, credits, and deductions that are not available to single individuals.
When it comes to eligibility for government benefits, the CRA combines the family income of common-law couples. This may impact eligibility for certain programs and benefits, such as the GST/HST credit, the Canada Child Benefit, the eligible dependant credit, and the Guaranteed Income Supplement and Allowance. For example, if one spouse has a low or no income, claiming benefits as a couple may result in a higher benefit amount.
It is important to note that the definition of a common-law relationship varies across different provinces in Canada. For instance, in Ontario, it is defined as three years of cohabitation or one year if the couple has children, while in British Columbia, the threshold is only two years.
In the context of a relationship breakdown, the CRA considers a couple separated only after they have lived apart for more than 90 days due to the breakdown. Until this 90-day threshold is reached, they are still considered common-law, even if temporarily separated. Once the 90-day period has passed, individuals should update their relationship status with the CRA to ensure accurate assessment and eligibility for benefits.
Overall, while common-law relationships offer access to certain tax benefits, it is crucial to understand how the CRA treats them for tax filing purposes, as it may differ from province to province. By understanding these distinctions, couples can accurately file their taxes, maximize their benefits, and avoid potential complications.
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Frequently asked questions
A common-law relationship is defined as living in a conjugal relationship with someone who is not your married spouse. This definition includes at least one of the following conditions: living together for at least 12 continuous months, sharing a child by birth or adoption, or having custody and control of a child who is wholly dependent on one partner for support.
Common-law couples are treated similarly to married couples for tax purposes. This means that common-law couples have access to specific tax benefits, credits, and deductions that are not available to single individuals. However, there may be disadvantages to filing as common-law versus filing as a single person. For example, the combined family income may affect eligibility for certain benefits.
Filing taxes as a common-law couple in Canada can result in lower overall taxes and increased benefits. Some specific advantages include income splitting, combined deductions and credits, and increased benefits for children.
Filing as single when you are considered common-law is against the law. You run the risk of being reassessed and paying interest and penalties on unpaid taxes. You also risk being denied CPP and other pension survivor benefits.
