Marriage and Common-Law Relationships: Knowing the Difference

Are you familiar with the difference between marriage and common-law partnership? Learn about how the Canada Revenue Agency classifies your relationship, and find out the resulting implications for your taxes.

The Canada Revenue Agency considers you to be a married person if you were legally married before or during the year for which you are filing your tax return. When completing your return, you must report a variety of information, including your spouse’s name, net income, and employment status, as well as whether or not your receive certain benefits, such as the Canada Child Benefit.

The CRA considers you to be in a common-law relationship if you have lived together with your partner for more than 12 consecutive months, or if you have a child together, either related to you by blood or through adoption, or if you have primary custody of a child under the age of 18.

The 12-month cohabitation period must be complete by Dec. 31 of the year of filing. Under Canadian law, same sex couples and couples of the opposite sex are both treated the same for income tax purposes.

The CRA requires that you disclose your marital status in order to receive the appropriate benefits.

For example, the Canada Child Benefit is usually awarded to the female partner in a marriage or common-law partnership. If you are in a same sex marriage or common-law partnership, the recipient can be designated.

To prevent false claims, the CRA may occasionally ask you to submit proof of your marital status. This is to ensure that there is no abuse of the system regarding the allocation of benefits such as the CCB.

If you are a senior citizen, you are able to split your pension income with your spouse in order to reduce taxes. Splitting your pension income allows you to potentially decrease your taxes owing by dropping you to a lower tax bracket.

For example, if your spouse is in a low tax bracket and you transfer $5,000 of your pension income to her, this will could drop you to a lower tax bracket as well, allowing you to save a significant amount in taxes owed.

The CRA prefers that you to update their records of any change in your marital status as soon as possible, but requires this to be done by the end of the month following your marriage.

For example, if you were married on June 8, you will need to inform the CRA by July 31.

You can update this information through your CRA My Account online, or by completing and mailing in form RC65, Change in Marital Status. You can follow this same procedure for separations, which the CRA considers to be living apart from your partner for more than 90 days for reasons pertaining to a breakdown in your relationship. Note that the CRA does not acknowledge separations for couples who are still living together.