I have a client who will be moving in with their partner August 1, 2022, when he moves to another province for a job after graduation. They do not live together now so this is nothing to do with 2021 taxes.
Do they have to wait the full 12 months (August 2023) to change the marital status or can they opt to change it in August 2022 when they move in together (like marriage status changes the day of the wedding)?
I can find lots of information that they must claim CL after 12 months co-habitation, but nothing about if doing it sooner is an option.
We don’t want to circumvent the law, just understand their options.
Yes, you can file the 2022 returns as common law. CRA recommends waiting an additional year because many such arrangements don’t last long - if the couple breaks up, you have to change the status on the tax return again. Also, many people prefer to report “single” as long as possible to get additional deductions they may lose when they start reporting as a couple.
This must be some type of unpublished internal CRA policy?
My understanding is that unless both individuals were the parents of the same child they are not considered common law until the 12 month period is up.
From subsection 248(1)
common-law partner, with respect to a taxpayer at any time, means a person who cohabits at that time in a conjugal relationship with the taxpayer and
(a) **has so cohabited throughout the 12-month period that ends at that time**, or
(b) would be the parent of a child of whom the taxpayer is a parent, if this Act were read without reference to paragraphs 252(1)(c) and (e) and subparagraph 252(2)(a)(iii),
and, for the purpose of this definition, where at any time the taxpayer and the person cohabit in a conjugal relationship, they are, at any particular time after that time, deemed to be cohabiting in a conjugal relationship unless they were living separate and apart at the particular time for a period of at least 90 days that includes the particular time because of a breakdown of their conjugal relationship; (conjoint de fait)
and even the Marital Status publication uses the term “at least” when referring to Common-Law rather than offering a choice of marital status during the first 12 months of cohabitation.
“At least 12 months”, means you are not common law unless you have been together for 12 months, unless you have a child that both of you are the parent of. If you start living with someone who has dependent minor child of you have custody and control and that child is wholly dependent on you for support, you become the parent and you are considered to be immediately in a common law relationship.
When two unrelated older people live together in the same house, are they automatically living common-law? Do I have to ask about conjugal relations? If I get separate payments for the income tax, and they claim single, am I wrong not to argue with them? Didn’t someone famous say that the courts have no place in the bedrooms of the nation?
That was the explanation I got from one CRA agent years ago. I suppose the reasoning may have be just that agent’s own opinion?
I have filed “common law” for occasional clients who have been together for less than a year, and CRA has never had an issue with it. But, it’s rare that someone wants to do that. Much more often I have to convince clients who have been together for years that they are not allowed to file as “Single”.
I usually have to explain to people they are common law after the year too. I don’t argue it though. I can think of too many people who I know aren’t conjugal that would appear to be if they came into my office for the afternoon. That list would make an interesting philosophical conversation over wine.
This is one of those rare situations where it will be a financial benefit to them to change it, which is why the question came up. I don’t want them to end up in a situation where CRA denies the benefit and they have to pay it back. Right now, my client is in school and lives with his brother. In August, he goes to work in another province at a great job. His boyfriend and brother are moving with him, at which time the boyfriend will start university and be fully dependent on my client until after his graduation.
I don’t have doubts about the relationship itself or even that it is already financially intertwined. The only reason they aren’t living together now is covid. The 4 of them (boyfriend has a roommate) decided they didn’t want to move and risk all the social contacts that involves. Now they are only waiting because they are moving in August anyway.
I had a client who unfortunately died suddenly, and it had to be determined whether his girlfriend was a common-law spouse and could get his OMERS pension (considerable sum, plus future health benefits). OMERS had a long list of considerations other than where you sleep (in fact the guy slept at his girlfriend’s place every night) but what the couple didn’t have was comingled finances: joint investments, (“active”) bank statements, household bills/lease/ownership in both names, life insurance on each other, combined car/home/health insurance. Then they also wanted affidavits from friends, relatives, doctor etc. So there are multiple ways to distinguish spouse from roommate. In the end, even though the guy called her his spouse in his will and pension documents, OMERS denied her the spouse pension and she had to share the death benefit with his kids. I had filed them as divorced because they had separate addresses, and it actually worked for them because they each had a principal residence and made too much to qualify for benefits.
I think it breaks down to whether or not they are living as a family. Sharing expenses rather than “splitting expenses”, eating together, spending time together socially, lot of factors go in to deciding if they are living as a family. Conjugal relationships is one of those many factors. Think in terms of a “family household” which is not able to take advantage of various refundable and non-refundable tax credits because they claim “married or common-law” vs another “family household” which takes advantage of them by claiming “single”, though their financial situation could be the same or similar.