Common-Law relationships are common in today’s society. Unfortunately, many people do not know that they have an obligation to inform the Canada Revenue Agency of this change in their marital status.

In CRA’s view, you become common-law with someone when the following happens:

You are involved with a person who is not your spouse, with whom you are living in a conjugal relationship, and to whom at least one of the following situations applies. He or she:

  • has been living with you in a conjugal relationship, and this relationship has lasted at least 12 continuous months;
  • is the parent of your child by birth or adoption; or
  • has custody and control of your child (or had custody and control immediately before the child turned 19 years of age) and your child is wholly dependent on that person for support.

Note: In this definition, 12 continuous months includes any period you were separated for less than 90 days because of a breakdown in the relationship.

 

If you separate, in CRA’s view this situation will only be recognized by the government as described by them below:

You are separated when you start living separate and apart from your spouse or common law partner because of a breakdown in the relationship for a period of at least 90 days and you have not reconciled. A separation of less than 90 days is not considered a separation for the purpose of Child and Family Benefits. Once you have been separated for 90 days, the effective day of your separated status is the day you started living separate and apart.

If you continue to reside in the same household and continue to share parenting and financial responsibilities, we will not consider a separation to have occurred for the purpose of administering the Canada child tax benefit or goods and services tax/harmonized sales tax (GST/HST) credit legislation.

 

Now the above is not a catch all scenario. There are some scenarios and living conditions that are much more complicated than the above and disputes can arise in terms of eligibility for certain programs. Fortunately for those where the above does not really apply in full, precedence has already been established in many court cases. In the case of Hendricken vs HMQ, the judge identified 7 main issues that will determine someones common-law status as well as a set of questions related to each. Once the questions were answered, the judge was able to come with a sound and reasonable conclusion on the matter. Our firm has this data and questions available to anyone interested, but in brief the 7 main issues addressed related to Shelter, Sexual and Personal Behavior, Services, Social, Societal, Support, and Children.

 

Therefore, it is very important that you assess your situation if this applies to you. Your status will affect your eligibility in the CCTB, GST/HST credit, and WITB programs. Also, the government provides no leeway if they later find out that you should have previously reported the change in your marital status. It is not uncommon for the government to assess you a balance owing for previous program payments made to you that should never have been made. My advice to anyone this may apply to is to avoid this future financial pitfall and report it right up front.

It is advisable that if your marital status does change that you report it to CRA as soon as possible within a month of qualifying according to the above criteria. Alternatively, you can report this on your personal tax returns, but beware of the timing on filing versus the benefits that you may no longer be eligible for. CRA specifically states that they would like to know within a month of your status changing.

If you have any questions on the above, we will gladly be able to assist you.