How Does the CRA Evaluate Marital Status?
Properly claiming your relationship on your taxes is important as it impacts the tax credits and benefits both individuals may be eligible for. Moreover, accurate reporting serves as a safeguard against inadvertent claims, which could result in a violation of one’s tax obligations.
An individual must notify the CRA if they are:
- in a common-law relationship;
- separated for more than 90 days (due to a breakdown in the relationship);
- divorced; and
- if their spouse or common-law partner died.
Common-law relationships are treated in the same manner as a married couple by the CRA. If you and your partner have lived together for 12 consecutive months, you may be considered common-law for tax purposes. If you have children together, you may be considered common-law partners as soon you begin living together. If you and your common-law partner were living together, you must be separated for at least 90 days before you are considered officially apart. Once apart, you may file your returns as single. However, if at any point within the 90 days you and your common-law partner get back together, the 90-day separation period restarts.
If you were married in a civil or religious ceremony in Canada, or anywhere else in the world, you will be considered married for tax purposes by the CRA. You must report your status as married for 90 days after your separation or until you divorce. Once you have been married, you cannot be considered “single” on the tax returns ever again. Depending on the circumstances, the status must be reported as “separated” or “widowed.”
The Income Tax Act collapses the inquiry into one question: have they been living separate and apart for a period of at least 90 days because of a breakdown of their relationship? However, the Tax Cout of Canada has made clear that it is possible to live separate and apart within the same dwelling, a long-standing interpretation adopted from Divorce Law. Whether or not partners have been “living separate and apart” is determined through a consideration of the seven criteria set out in Molodowich v. Penttinen. These factors, which are often applied in varying weight and on a case-by-case basis, include:
- Sexual and Personal Behavior;
- Social Life;
- Societal Expectation;
- Economic Support; and
It is possible to be separated from someone else while also being in a common-law relationship with your new partner. If you are in a new relationship,12-month cohabitation rule persists, either consecutively or initiated with the birth of shared children, to establish common-law status.
If you lost your spouse within the last year, you must report your status as “widowed. You must be cognizant of your tax obligations, as well as those of your deceased spouse. Dealing with the loss of your loved one is very difficult, thus, retaining professional services would be highly recommended during such a challenging time.
The intricate landscape of marital status evaluation by the CRA underscores the necessity for precise adherence to regulatory guidelines. Understanding the CRA’s criteria is imperative for accurate reporting and compliance with your tax obligations.
**Disclaimer: This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.