Separation and Income Tax

March 25 2019

Why does CRA care about my relationship status?

There are tax implications associated with dissolving your marriage/partnership. The two big ones are the Universal Child Care Benefit (UCCB) and the GST/HST credit.

The UCCB will be allocated to one partner, and that person can utilise the benefit on their tax return. It is important to note that BOTH parents must continue to file a tax return every year to continue to receive the benefit.

Many people’s financial situation changes after a separation. If you have not previously claimed the GST/HST credit on your tax return, you can do so after you change your relationship status with the CRA. It’s a simple matter of writing a letter to your tax centre and waiting for their decision on how much credit you are entitled to. 

What is my CRA marital status? 

There are four types of CRA marital statuses that may apply to you:

  1. Married
  2. Living common law
  3. Separated
  4. Divorced

Married applies only to persons who are legally married. This includes when you and your spouse are separated involuntarily, such as when spouses live apart for work or school, or if one spouse is incarcerated. 

If you have a partner to whom you are not legally married, then they may be your common law spouse. You should file as “living common law” if: 

1. The two of you have been cohabitating for at minimum 12 months in a row; or

2. The two of you are parents of a child, by birth or adoption; and

3. Together you have custody and control of your child and your child is dependent on your partner for support. 

My partner/spouse and I were living together, but now we are separated. How should I file? 

Partners or spouses are not separated parties for tax purposes until they have been living separate and apart for at least 90 days. Once the 90 days has elapsed, you should contact the CRA to change your status with them. If you have children, they will recalculate your child care benefit, based on your new family net income.

When does my status change to separated? 

The effective date for being separated on your taxes is the date that you and your spouse/partner started living apart. However, this separation date does not take effect until 90 days later.

When does my status change to divorced? 

At the end of the month in which your divorce comes into effect, you should contact the CRA to change your marital status. 

What are the differences between statuses? 

Depending on your status, you may be able to claim certain deductions on your taxes. If you have children, your child care benefit will be adjusted based on the net family income of a single person. Only one party may claim the benefit for a single child, so be sure that you and your former spouse/partner have determined who will make the claim. 

In addition, if you supported a partner/spouse who made less than $11,809 in the tax year, you may have been able to receive a tax credit that a separated/divorced person would not be able to. If your spouse or partner was disabled, you may have received a caregiver credit which is also no longer available. 

Finally, any unused credits that a spouse or partner may have transferred to you are no longer available when your status changes. The amounts that were available for transfer are the age amount (line 301), the pension income amount (line 314), disability amount for self (line 316), tuition amount (line 323), and the caregiver amount for infirm children under 18 years of age (line 367). 

Should I bother changing my status?

Yes. When your relationship breaks down, be sure to make note of your separation date. After 90 days has elapsed, you need to update the CRA of your change in status in order for the most accurate tax returns. Failure to do so could result in an audit or inaccurate refunds. In order to save your future self the hassle, update your marital status with the CRA when you meet the requirements to do so. 

How do I change my status?

You can do this online at MyCRA, by telephone, or my mailing Form RC65 Marital Status Change, to the CRA office at which you file your taxes. 

CRA Marital Status Change Form (RC65 E)

CRA Marital Status Change Form (RC65 E)

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