PERSONAL TAX TRAINING

MARITAL STATUS CHANGE AND CANADIAN TAX LAW

Changes to your marital status can significantly impact your tax obligations in Canada. Whether you get married, enter a common-law relationship, or separate, you are required to inform the Canada Revenue Agency (CRA) to ensure accurate calculation of benefits and tax credits. Understanding how these changes affect your tax return can help you stay compliant with Canadian tax laws.

Definitions

• Spouse: A person to whom you are legally married.
• Common-Law Partner: A person with whom you have been living in a conjugal relationship for at least 12 continuous months or share a child by birth or adoption.

When to Notify the CRA

You must notify the CRA of a marital status change in the following circumstances:

• You get married or enter a common-law relationship.
• Your relationship ends due to separation or divorce (must be separated for at least 90 days).
• Your spouse or common-law partner passes away.

Use Form RC65 - Marital Status Change or update your status through the CRA’s My Account service online.

Tax Implications of Marital Status Change

• Net Income Reporting: You must report your spouse's or common-law partner's net income, even if it is zero, to determine eligibility for certain credits such as the GST/HST credit.
• Benefit Adjustments: Your marital status affects benefits such as the Canada Child Benefit, Working Income Tax Benefit, and GST/HST credit. Failing to update your status may lead to overpayment or underpayment of benefits.
• Spousal Support Payments: Payments to a spouse or common-law partner may be deductible if they meet CRA criteria.

Special Considerations

• If you separate, the 90-day period must elapse before the CRA considers your status as separated for tax purposes.
• Individuals who reconcile after notifying the CRA of a separation must update their status again to reflect the reconciliation.
• In cases of separation where children are involved, custody and support arrangements may affect tax obligations.

How to Notify the CRA

To inform the CRA of a marital status change:

• Log in to your CRA My Account and update your marital status online.
• Complete and submit Form RC65 - Marital Status Change by mail.
• Provide your spouse's or common-law partner's net income from Line 23600 of their return, even if they did not file one.

Supporting Documentation

While the CRA does not require supporting documentation when reporting marital status changes, keep relevant documents (e.g., marriage certificates, separation agreements, or custody arrangements) for your records, as they may be requested during an audit or review.

Conclusion

Keeping your marital status up to date with the CRA is essential for accurate benefit calculations and compliance with Canadian tax laws. Be proactive in notifying the CRA of any changes to avoid delays or penalties. For additional guidance, consult a tax professional or visit the CRA’s official website.