I tried that a few years ago when the husband and wife separated into the upstairs and downstairs of a house. Separate entrances, separate living quarters with no shared living areas but it was the same building and essentially the same address. CRA questioned why they were being filed as separated if they had the same address. I explained about the separate living quarters. Official separation in April 2019. Got a court order in June 2020 and husband started paying spousal support July 1, 2020. Filed a claim for spousal support deductions and the CRA questioned it of course. Sent in all the back up/court orders etc. Was denied because they were still living together. She wasn’t even in the house for a good chunk of the time as she and her young son had gone to Europe from Sept 2020 to Feb 2021. Much fighting with CRA ensued but they wouldn’t budge. He wasn’t officially separated for tax purposes until he actually moved to a different address in April 2021 and we provided the rental contracts to show he had “moved out”. Maybe we got a bad representative but if that is indicative of filing policy there is no way you are going to get him declared separated and be able to claim a dependent i.e. equivalent to married credits.
I have a client who separated from her spouse about 20 yrs ago. The ex-spouse moved to another province for about 5 years, then returned back to Manitoba. To maintain his relationship with the 3 kids, the wife allowed him to move back into the home and he lives in a different area of the home. CRA took notice that his address was now the same as his ex-spouses address and reassessed both their tax returns, changing their marital status from Separated to Common-Law. They fought this with CRA but the CRA refused to budge on their position, insisting that since they are both living under the same roof, they must claim common-law.
I only file the one return, so from that point forward, we have been filing as common-law and reporting the ex-spouses Net Income. My client has strong principles, and has refused to consider applying any tax savings options such as pension Income Splitting which would save them several hundred dollars combined annually. They file their returns treating everything separate since in their minds they are SEPARATED despite living under the same roof.
So, a word of caution in your situation claiming a child as an eligible dependant. Once CRA catches up to them noticing they still live under the same roof, their returns may be reassessed, the eligible dependant removed, and they may owe money back for claiming a credit were they weren’t eligible to claim.
Similar situation, different result. Separated mid 2024, no agreement yet. Filed both as separated 2024 and 2025. Each claimed a child as equivalent to married.
No pushback yet.
@Neal - I think the key here is no push back yet. If they asked for back up for the equivalent to married claim and accepted it with them living under the same roof that is entirely different than the filing flying under the radar because no one has looked at it yet.
I may refile, claiming one child as an eligible dependant, which , if nothing else would trigger a review of her return and give him some negotiating room with her.
I haven’t had that client situation but I’d argue the economic issue that separated couples can’t automatically move to a separate address. The availability of rental accommodation and the inability to easily go out and purchase another house means that many spouses in this situation can’t acquire separate accommodations.
I tried that with mine - they didn’t go for it. And that was at the height of Covid too in 2020. It was two years from date of separation in Apr 2019 to him being able to fully move away.
The only time this has worked in the decade+ I’ve been doing reviews was when there’s legal separate mailing addresses (upstairs/downstairs or A/B) AND they have a legal separation agreement. Without BOTH of those in place, they can’t be separated for tax purposes.
For eligible dependant, only one can be claimed per address, even if they are just roommates so the legal secondary suite would come into play there.
Ultimately, it all comes down to the auditor and if they feel like digging their heels in and sending everyone to tax court to fight it out.
Just know that if CRA gets wind of things, and it does end up in a review situation, CCB will also become an issue. Have seen CRA take 50% of the CCB credits in a split custody agreement, even if the separation/divorce agreement says one person gets all the CCB. CRA says they don’t and won;t honor that.
Good luck, regardless of what you do, it’s an uphill and drawn out CRA battle no matter if you trigger it or if CRA does.
Thanks, @AlbertaEFileT after posting my question, I did see another discussion you were in and I saw that it looks pretty hopeless. My couple is legally married even if they picked a separation date. Nothing has changed but she gets extra benefits by filing as separated.