Caught Cheating? There’s a Tax Side to Infidelity
TurboTax Canada
July 30, 2025 | 3 Min Read
Updated for tax year 2024
When a video went viral recently that showcased a married CEO getting very cosy with his employee at a Coldplay concert in Boston, social media exploded with memes and commentary not just about the betrayal, but about the fallout—emotionally, socially, and yes, even financially.
While not everyone gets caught out on a jumbotron, the reality is that thousands of Canadians experience the upheaval of infidelity every year. And while it may not make headlines, cheating in a marriage can have serious tax and financial implications—especially when it leads to separation or divorce.
We break down what you need to know before the Kiss Cam at a public event outs you.
What does cheating have to do with taxes?
On the surface, cheating seems like a personal issue—messy, emotional, and private. But we know that infidelity can be a leading cause of separation and divorce in Canada, and when a marriage ends due to infidelity or otherwise, the Canada Revenue Agency (CRA) can become involved in more ways than most people expect.
Your relationship status isn’t just for Facebook—it’s also a key factor in how your taxes are calculated. When you separate or divorce, everything from your benefits to your filing status to how you split assets can change.
Separation vs. divorce: Why the timing matters
You might not file divorce papers the day you find out your partner cheated, but if you decide to take a break and start living apart, that counts. Under Canadian tax law, the CRA considers a couple separated if they live apart for at least 90 days due to a breakdown in the relationship.
People often assume they need a legal divorce to be considered separated for tax purposes, but that’s not true. Once you've lived apart for 90 days, you're no longer considered a common-law or married couple by the CRA, and that could mean big changes to your tax situation.
This change in status can affect several things:
- Your eligibility for the Canada Child Benefit (CCB)
- Your entitlement to GST/HST credits
- How you report your net family income
- Claiming eligible dependents
- Taxes on spousal support
The CRA can also audit these claims—so make sure the timeline of your separation and what you are claiming is clear and truthful.
Filing taxes after a split
So, you're separated. Now what?
Your filing status changes as of the date of separation— not the date you tell the CRA. When preparing your taxes, you’ll need to:
- Indicate your marital status with an RC65 form
- Report any support payments made or received
- Adjust your CCB and GST/HST claims accordingly
- Recalculate your net family income if you were previously filing with a spouse
It’s critical to update your marital status with the CRA as soon as the 90-day period passes. If you don’t, you could be overpaid benefits—and the CRA will ask for that money back.
Splitting up? You’re also splitting up your assets
Even if one partner was unfaithful, Canadian family law generally splits marital property equally during a divorce or legal separation. That includes property, investments, pensions, and registered accounts.
There’s no ‘cheater penalty’ in the tax code. Emotions can run high, but the CRA doesn’t care why a relationship ends—they care about how assets and responsibilities are distributed.
If splitting up your assets, capital gains taxes may be triggered if you’re transferring certain assets. If you sell your cottage or shares in a business, for example, there may be capital gains.
Registered accounts transferred due to a divorce settlement are not immediately taxed but must be reported properly using Form T2220.
What about spousal support?
If infidelity leads to separation and one partner makes considerably less income, spousal support may come into play.
Spousal support payments are tax-deductible for the payer and taxable for the recipient—but only if they’re made under a formal agreement.
That means informal payments—even if made in good faith—don’t count at tax time. You’ll need a separation agreement or court order to claim deductions or report income properly.
Child support, on the other hand, is not taxable or deductible in most cases.
Protecting yourself financially (and emotionally)
You can move forward after infidelity. Here’s how to plan for the future—especially when finances are involved.
- Get everything in writing: Create formal and legal separation agreements, especially for support payments and property division.
- Change your beneficiary designations: RRSPs, pensions, and life insurance policies often still list an ex-spouse.
- Separate accounts and monitor your credit: Joint accounts and shared debts can be used—or abused—by an ex.
- Get tax help early: Work with a tax expert, like those at TurboTax, to help file when your life changes your tax situation.
Emotional recovery takes time, but tax deadlines don’t wait. If your relationship changes, your taxes change. It’s that simple
TurboTax Canada offers expert support to help you navigate this financial transition. Whether you do your own taxes or work with one of our professionals, we’ve got your back.
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