Romantic roommates at tax time

Living with a partner and unsure what the tax implications are?

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There are some tax perks for common-law couples in Canada so filing accurately can work in your favour, not to mention keep you on the right side of the law.

Many young adults find themselves in a stressful situation come tax time. It’s not uncommon for 20-somethings to move in with their significant others while at the same time starting a new career job and making their first RRSP contributions—all of which come with their own set of tax implications. For some, tax filing suddenly gets complicated.

The good news is the Canada Revenue Agency puts less emphasis on labels than, say, parents tend to. In a nutshell, if you’ve lived together for 12 straight months by Dec. 31, you are considered common-law and have to report as such by the April 30 income tax filing deadline.

The biggest misconception among new common-law couples is that they have to file together at the same time and on the same form, said H&R Block Senior Tax Analyst Cleo Hamel. That’s how it works in some U.S. states, but not in Canada.

“From a Canadian tax perspective, regardless or your marital status you are an individual taxpayer and you are required to file your own tax return,” Hamel said.

There is a question on everybody’s “Information about you” page however that asks what your marital status is as of Dec. 31.

If you meet the definition above you have to include your common-law partner’s name, social insurance number and their net income (Line 236) even if it’s zero, along with your personal own information.

The main change resulting from a new common-law living arrangement young adults tend to notice has to do with the GST quarterly payment, Hamel said. If as a single person you qualified for the GST rebate of up to $260, chances are once you become common-law you probably won’t qualify anymore. That’s because the government will combine your net incomes to see if you meet their definition of a low income family (less than $34,000 net income per household).

“I do have clients who say, well in that case, I don’t want to say that we are common because I want to continue getting that money,” Hamel said. “But that’s just not an option.” It’s illegal to lie on your tax return. To see if you qualify for the GST rebate, use the CRA’s calculator.

In cases where the couple may qualify for the GST rebate, one person does have to claim it and the quarterly cheque can only written in only one person’s name.

“In the end it doesn’t really matter who gets it, but it can be a really touchy point for some couples,” she said.

On the plus side, as a common-law couple you do get to pool some tax credits including medical expenses and charitable donations.

You’re entitled to a 15% credit on the first $200 of charitable donations and a 29% credit for every dollar over $200. By pooling your donations together you can reach the $200 threshold faster to get the most bang for your donation buck.

In cases where a couple’s combined medical expenses are high, the lower income spouse should claim the medical expenses tax credit (on Line 330) for both to maximize the medical credit that kicks in when bills exceed $2,109 or 3% of personal net income.

In cases where one partner is making little to no income, the working partner may be able to claim a spousal credit (Line 303). As Canadians, the first $10,822 we make is tax-free. If your common-law partner is making less than that, say he or she is a graduate student for instance, your tax-free income is doubled from $10,822 to $21,644 by claiming the spousal credit.

“That’s a significant savings,” Hamel said.

What’s more, the student spouse can claim all student-related tax credits (Line 323) with a qualifying tuition receipt and transfer any unused credits to their common-law partner (Line 324).

All these new tax implications may seem overwhelming but a certified tax accountant, tax preparer or online tax software can help.

It’s a good idea to notify the CRA if your marital status changes during the year (outside of the so-called “tax season”) by submitting the RC65 Form Change of Marital Status to ensure you’re getting the credits you’re entitled to.

It’s also worth mentioning that while the implications of being married or common-law are identical from a tax perspective, that’s not always the case when it comes to other financial milestones like estate planning, insurance, joint investments etc.

33 comments on “Romantic roommates at tax time

  1. I'm confused? is this across Canada? for example, you're common law for legal purposes after THREE years of consecutive years living together? is it different for tax purposes?

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    • Hi Nate,
      The short answer is yes. For tax purposes you are common-law after 12 months. For legal, insurance and other purposes it can vary. Talk about confusing right?!?! Thanks for reading.

      Reply

  2. Well this explains well. Lots of people across Canada will surely be interested with this. Great post.

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  3. I am still working however my commonlaw spouse is retired. He is currently living off of investments/savings until he is able to draw his pension… Am l able to claim the spousal credit for him?

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    • Dear Brenda,
      Here's Ms. Hamel's response to your question: It depends on the amount of income his investments are generating and paying him every year. If they are more than $10,822 for 2012, you will not be able to claim the spousal amount. If he earns less than this, you should be able to claim a portion of the spousal credit.

      Reply

    • Every part of the income is taxed whether its investments or savings if it is less then what stefania said then its ok over and above it will be taxed. (Correct me if I am wrong Stefania)

      Reply

  4. i know someone who was married for 6 months and has been seperated for the past 9 years. For the last 6 years has been living with her boyfriend whom she refers to as her husband, but has been claiming on income tax as seperated not living common law and ends up getting large refunds and brags about it. Is this a legal way to file as both are true but are you supposed to file as the the most current situation?

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    • This is why the Canadian tax system is full of loop holes. Sub. housing one of them. People lie, get away with it, meanwhile the middle man keeps paying on and on and on and on…….

      Reply

  5. if your common-law owes money to courts and is getting garnished through the CRA, will it effect my refund?

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    • My partner and I have been living common law for the past several years but have been filing as single. I would like to know the easiest way to come clean to the CRA and correct this and what the consequences may be. Only I have been receiving the gst credit. My partner has just passed away.

      Reply

  6. I’ve been living common law for over a year now. When I indicate common law on my tax form, does my partner fill out her taxes normally (indicating common law as well) and receive any refunds that she may have? Or, because my bottom line may change she’s not eligible for any refunds?

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  7. If you claim you are living common law and you make less than the deductible, you are no longer entitled to the working poor benefit. How does the CRA determine you are living together, by the address

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  8. Your article is interesting. There is just one problem with Revenue Canada taxing spouses as married. Common law couples have no rights under the MPA Marital Properties Act so it is a violation under the Charter of Rights in Canada Section 15(1).

    I spent 17 years building a construction Company with 7 units and lost the right under the MPA because i “chose” not to be married. This is how it goes, common-law spouses are entiled to maybe between 10%-50% of the assets. (I got 20%). Dependent common law Spouses are also entitled to lesser amount of sposal and a lesser amount of child support for a lesser amount of time. WHAT?????

    Now it will take a court case against Revenue Canada. The dependant common law spouses Charter of rights are being violated. REVENUE CANADA WANTS TO TAX COMMON LAW SPOUSES AS MARRIED BUT UPON BREAK IN THE MARRIAGE COMMON LAW SPOUSES AND CHILDREN HAVE NO RIGHTS UNDER THE MARRITAL PROPERTIES ACT AND SUBSTANTIALLY REDUCES RIGHTS TO SUPPORT

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  9. I have debt from student loan, when I file my taxes my income tax return goes to pay some of it off. im worried when we move in together he will have to pay my debt… Would my boyfriend soon to be commonlaw be responsible for my debt come tax time???

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  10. So how do you legally declare yourself “not a couple”. I share/rent a home with a female and we are not a couple, or “friends with benefits” and it has worked well but its getting close to being over a year. If Revenue Canada decides they want to call us a couple… how do I stop that from happening? Is there any instance where two males have been declared a couple for tax purposes that have not declared themselves a couple (looking for bias here)?

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  11. Am I classified as in a common law relationship if I live with the father of my child? we have a child together but we are not romantically involved.

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  12. I was married for 15 yrs we then separated. I have been living with another person for at least 27 yrs my ex husband died back in 2005 we never did get divorced. My situation now is that common law spouse and I have been living separately in the house which we both own until we can sell it. My question is how do I respond to filing my taxes do I file as separated or widow or do I have to still find jointly with my partner. I cannot afford to move out my hours at work have been cut down to a couple of days only and I just now found out I have parkinson please help!

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  13. I had a holy union ceremony with my significant other in the Philippines but we are not physically together right now because of immigration barriers. Do I file as single or common law?

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  14. You touched gst… I wonder how many people realize that its not just a gst cut you may experience….
    If your common law spouse ends up owning at com tax time, it doesn’t matter WHO clamined for GST.. the gst refund will go to the person who has the income tax debt. and keep an eye on your online accounts.. they’re not so great at sending letters (or emails) to tell you about the unexpected debt. Four months later you are looking for your GST, you call and they say your partner owed so you lost it. (even though when you filed, you thought you got a refund).
    W’eve been 4 years trying to get this straightened out, all because a tax rep. told us to add two amounts and claim them, when we weren’t supposed to. And here we are trying to fix a 5k income tax bill AND student loan debt.

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  15. I filed as common law, because it’s mandatory. I lost all my benefits, in the past I received $500-$2500 in my tax returns, last time I ended up owing $3400. I moved December 30.

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  16. The tax tips are good but aren’t there legal implications if you identify yourself as common law then break up. I believe higher probability of having to compensate financially the lower earning partner because of division of family property laws.
    Wouldn’t it be easier to part ways under the banner of roommates? As an official common law couple are you also then responsible for each others debts?
    Can you clarify if this is the downside?

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  17. So what i got from this as soon as you go common law the male no longer gets basic living gst?

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  18. I have been living with my boyfriend since April 1st, 2015 – when do we have to start filing joint tax returns?

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  19. Hi, If a couple has been together for some time, own a home together but have filed their taxes separate because there are no GST rebates or anything…RSP’s that each contribute and use UFile, takes 2 minutes to do taxes…is this still illegal and why?. If they wanted to ensure come clean and get on track for their future, how should they go about this, get an accountant and inquire?

    Reply

  20. What if my common law is living with me for more than a year, but her status in Canada change from being a tourist to be a student and to have a student visa now? To better explain: she came to live with me in Nov. 2014 and in June 2015 she got a student visa for 2 years. Can we claim the whole 2015 as common law?

    Reply

  21. As seniors, if we are living common law do we qualify for income splitting?

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  22. I am confused after reading Rev Can info I have a client who was with a guy for three months in 2013 and they conceived a child during that time. He moved home to his parents home in 2013 and in the fall of 2015 they moved back together She says Rev Can says she was living common law in 2013 even though it was only for three months And for 2015 at the end of the year they were together but only for three months Do they have to claim commonlaw in both cases. In actually in three years they have only been together for six months

    Reply

  23. Very interesting post, it explains a lot. Thanks for sharing.

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  24. In our case, filing my income tax for 2014 I declare my common law partner. He doesn’t have SIN and no job. They send me letter to give his SIN and I send them CRA replied that my partner doesn’t have any SIN. They still send me couple of times asking for same question. They hold my kids child tax and my tax. Its hard for us now cause my income is not enough to support my kids. The time I filed my tax and declare my partner we didn’t get any approval from immigration that’s why he doesn’t have any status. I don’t know now which part I made mistake. Filing my tax and declaring my partner even no approval from immigration? Please help me to understand . I’m so desperate now to support my kids and our needs. Thanks

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  25. Hi,
    My boyfriend and I are thinking of rooming together, meaning we will have separate rooms but we will divide up the living costs of the house and each pay half the rent, half electricity, half gas, half cable/internet and half the groceries. The reason for this is I have two small children and do not want them involved in a common law relationship if we decided we can legally do this. Is it possible to legally do this? I know a family member who separated from her husband legally, and had to children BUT they lived together for a year, except Hubby slept in a room downstairs, they did it for their children for a year, and did it civilly .They also notified the BC government which they were allowed to claim separated but living together. I am wondering if there is ways around this “common law” thing. I really need a roommate, as my rent is high and I had a roommate previously and that person ended up not working out and has left me with all the rent for a 3 bedroom place and rent is hard to find here. So I would like my sons to sleep in the same room and rent the third bedroom to my boyfriend hopefully. Has anyone ever done this, is this possible, what would I explain to Revenue Canada.

    Reply

  26. My partner and I have been living common law for the past several years but have been filing as single. I would like to know the easiest way to come clean to the CRA and correct this and what the consequences may be. Only I have been receiving the gst credit. My partner has just passed away.

    Reply

  27. what if you reciv government income togethef

    Reply

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