Understanding Common-Law Partner Status for the Canada Revenue Agency (CRA)

The Canada Revenue Agency (CRA) defines a common-law partnership for tax and benefit purposes, and understanding this classification is crucial for compliance and eligibility for various tax credits and benefits. If you are living with a partner and sharing financial responsibilities, it’s important to know whether the CRA considers you to be in a common-law relationship.

What is a Common-Law Partnership?

A common-law partnership, according to the CRA, exists when two people:

• Live together in a conjugal relationship for at least 12 consecutive months; or

• Have been living together for less than 12 months but share a child by birth or adoption; or

• Share custody of a child and have a cohabitation agreement that suggests a conjugal relationship.

The key factor in determining common-law status is the continuous cohabitation and the presence of a relationship similar to marriage. Once a couple meets the 12-month requirement, they are considered common-law for tax purposes as of the first day of the 13th month.

Legal Implications of Common-Law Status for CRA

Being recognized as common-law by the CRA means:

1. Tax Filing Requirements:

   • You must report your marital status as common-law when filing your tax return.

   • Your partner’s income must be included when determining eligibility for benefits such as the GST/HST credit and the Canada Child Benefit (CCB).

2. Eligibility for Tax Benefits:

   • Common-law partners may qualify for spousal credits, medical expense claims, and pension splitting.

3. Impact on Benefits and Credits:

   • Certain tax credits, such as the Canada Workers Benefit (CWB) and the Age Amount, may be impacted by combined income levels.

4. Obligation to Inform CRA:

   • Taxpayers must notify the CRA when their marital status changes, either upon entering or exiting a common-law relationship, to ensure accurate benefit calculations.

Proving Common-Law Status

The CRA may request proof of a common-law relationship. Supporting documents can include:

• Joint bank accounts or credit cards

• Shared rental agreements or property ownership

• Utility bills in both names

• Insurance policies listing the partner as a beneficiary

• Identification documents listing the same address

Dissolving a Common-Law Relationship

If a common-law relationship ends, the couple is considered separated after 90 consecutive days of living apart. After this period, the taxpayer can update their status with the CRA. The change may impact eligibility for benefits and tax obligations.

Final Thoughts

Recognizing and properly reporting a common-law partnership with the CRA is crucial for tax compliance and benefit entitlements. If you are unsure about your status or its implications, consulting a tax professional can help ensure you meet all requirements and optimize your tax position.