How Marriage and Common Law Unions Change Your Tax Status

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This article originally appeared on the SimpleTax blog. SimpleTax has joined Wealthsimple to become Wealthsimple Tax. Now you can invest, trade, save, and do your taxes all in one place.

Did you get married or enter a common-law arrangement with your partner? Congratulations! While you may be riding the incredible high of finally having taken a significant step with your better half and just want to spend time discussing furniture arrangements, future holiday destinations, and retirement strategies, there are some changes that are less fun but equally important to talk about: Taxes.

When you get married, or start living together under a common-law arrangement, it can impact your tax situation. Some of the changes occur immediately (e.g., your eligibility for the GST/HST credit) and other changes impact you when you file your tax return. One thing that doesn’t change, however, is that you are both still required to file your own tax returns.

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While it’s obvious that your marital status changes when you get married, many people are surprised to find out that for tax purposes, they’re already living common-law. Under the Income Tax Act, your marital status changes to common-law when you’ve been living with your significant other for 12 months or more. Other situations that classify as a common-law arrangement include living with the person who you share a child with, either as a birth parent or under a custodial agreement.

What happens when your marital status changes?

Here are some things to be aware of when your relationship status changes:

  • Your entitlement to the GST/HST credit changes since it is based on “adjusted family net income”. Your adjusted family net income usually increases when you become married or common-law, so you might find that you no longer receive the GST/HST credit. If you are still eligible for the credit, only one of you will receive it, even if you were both receiving it before.

  • Your entitlement to the CCTB and the WITB change since these are also based on your adjusted family net income.

  • You can split or share certain credits. For example, if you both have medical expenses, one of you can claim them all to increase your refund. SimpleTax will automatically optimize your returns to take advantage of this.

  • If you are both supporting your children, the lower-income partner must claim the child care expenses, regardless of who actually pays them.

  • The higher income person can contribute to a spousal RRSP, effectively splitting income if you and your partner are in different tax brackets.

It’s important to let the CRA know when your marital status changes. You can do this through My Accountby phone, or by filing a form RC65. You must also accurately report your marital status when filing your tax return—even if you don’t really feel like you’re living common-law.

Last Updated January 11, 2021

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