Spouse or common-law partner amount

Tax Topics
1

Married couple 2023 return.

Husband - high marginal tax bracket
Wife - self employed - large loss - husband eligible for full amount of Spouse or common-law partner amount $14,144.58

T1A diagnostic (A non-capital loss available for carryback has been calculated for the current yr, consider applying the loss to prior year)

It’s not worth completing a loss carry back to any three preceding yrs because her taxable income was below basic personal amount.

However in 2022, her taxable income was around $11k resulting in Spouse or common-law partner amount of $2300 for her husband (Basic personal amount $13,303.98 - Spouse’s income $11,000).

If a loss carry back was done to 2022 bringing her taxable income down to zero - would he get full amount of Spouse or common-law partner amount $13,303.98? Is that something the CRA would automatically adjust for?

If not the loss can be carryforward and could benefit her later down the line when her taxable income increases and husband will likely still have high taxable income.

Thoughts?

2

25 or more years ago spouse of high earner partner decided to use her experience to open a small retail outlet. They agreed to be partners 50/50 split after 30K to her as the working partner.

First few years, they split small losses, each about 10K so she had 20K income net an he had 10K deduction. Eventually closed it down – never overall profitable.

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3

Research about “net income” and “taxable income”.

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4

Typically no - you’d have to file a T1-ADJ (or do a REFILE) for the spouse’s 2022 taxes. But, I have seen it a few times where the T1-ADJ was not necessary - for example, one client recently phoned CRA about something similar, and CRA adjusted the applicable return right then and there (in your case, it would have to be the high income spouse who phones CRA). Alternatively, you or the high-income spouse could use “Change My Return” via RAC or their CRA “My Account”.

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