Marital Status Change part way through year

Tax Topics
1

I have a client who has changed their status on September 1st from Single to Common Law, as at 31st of December they were still common law. Tax Cycle therefore disallows the use of an eligible dependent as a spousal equivalent, which I believe to be correct.

My clients common law partner has filed his,her tax return already and claimed their dependent as an eligible dependent or spousal equivalent and filed as common law.

I am advising my client that they cannot claim the dependent as spousal equivalent, I am correct?

2

You are likely advising your client correctly, although probably for the wrong reason. You are still able to make an Eligible Dependant claim in the year you become married or common-law

TaxCycle will initially disallow the claim in the circumstance of where a couple get married or become common-law during the year until you go to the “Dependant” Information screen, and answer the question “Eligible Dependant lived with” in the “Information about credits to claim” section.

From what you have suggested the reason your client can not claim their dependant as a spousal equivalent is because someone else in the same household has already made a claim for an Eligible Dependant. Only 1 claim per child OR 1 claim per household by virtue of 118(4)(b)

3

Neither a married or a common-law cannot claim dependant as equivalent to spouse.

4

@kevin1 was asking about claiming an Eligible Dependant in the year the clients became common-law (or married for that matter).

The answer is; if the client otherwise met the criteria of being able to make the claim for an eligible dependant, the fact that they became married or common-law during the year does not disqualify the client from making the claim.

Paragraph 118(1)(b) provides for the claim in the “year of marriage” or “year of separation” by virtue of the wording “at any time during the year”.

So I beg to differ with @jmvca; A married or common-law person may claim an equivalent to spouse credit (in year of marriage or common-law) if they would have otherwise met the regular conditions necessary to make the claim.

The reason I believe @kevin1’s client may not be able to make the claim is not because they became common-law during the year. My reply is based on the understaning the common-law partner has already made a claim (albeit for another child). Paragraph 118(4)(b) allows only a single eligible dependent claim per household.

118(1)(b)

Wholly dependent person

(b) in the case of an individual who does not claim a deduction for the year because of paragraph 118(1)(a) and who, at any time in the year,

(i) is

    (A) a person who is unmarried and who does not live in a common-law partnership, or

    (B) a person who is married or in a common-law partnership, who neither supported nor lived with their spouse or common law-partner and who is not supported by that spouse or common-law partner, and

(ii) whether alone or jointly with one or more other persons, maintains a self-contained domestic establishment (in which the individual lives) and actually supports in that establishment a person who, at that time, is

    (A) except in the case of a child of the individual, resident in Canada,

    (B) wholly dependent for support on the individual, or the individual and the other person or persons, as the case may be,

    (C) related to the individual, and

    (D) except in the case of a parent or grandparent of the individual, either under 18 years of age or so dependent by reason of mental or physical infirmity,

an amount equal to the total of

(iii) $10,527, and

(iv) the amount determined by the formula

118(4)(b)

(b) not more than one individual is entitled to a deduction under subsection (1) because of paragraph (b) of the description of B in that subsection for a taxation year in respect of the same person or the same domestic establishment and where two or more individuals otherwise entitled to such a deduction fail to agree as to the individual by whom the deduction may be made, no such deduction for the year shall be allowed to either or any of them;

5

Additionally, it is not clear from the post (1) WHEN the child was born, nor (2) if the child is “THEIR” (ie the specific two of them) child.

This couple may already have been common law for tax purposes starting from an entirely different date, which may have been prior to 2018, such as (1) the Day of birth of “their” child" , or (2) the day they began their cohabitation.
See definition of “Common law partner” in S248, particularly (b) of that definition.

6

Thank you for your response,
To clarify they 1st lived together in September 2017 and became common law in 2018.

My client’s partner has claimed an eligible dependent on his 2018 return for his child.
If only one child can be claimed per household my client cannot claim her child as per " Paragraph 118(4)(b) allows only a single eligible dependent claim per household."

Thank you