# Does it make sense to get married "legally" in Canada (in terms of taxation wise)?



## downloadduckss (Aug 5, 2011)

*Does it make sense to get married "legally" in Canada (in terms of taxation wise)?*

Hi

My gf and I are engaged - we have the option to get married abroad before our big day.

Just simply out of curiosity, I wanted to ask does it make sense for us to registered as a married couple in taxation wise in Toronto, Canada? What are the "Pros" & "Cons" to legally "get married" in terms of taxation?

Situation (me):
Single, never married before, currently living at my folks' place, never owned real estate properties, ~$10K RRSPs, working for employer full-time, ~$60K income

Situation (the gf):
Single, never married before, owns a residential property (highly mortgaged), $3K RRSPs, working for employer full-time, ~$75K income

Many thanks!
DD


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## MoneyGal (Apr 24, 2009)

Whether you get married legally or not, CRA will consider you married for tax purposes after you have lived together in a conjugal (= spouse-like) relationship for 12 continuous months -- OR earlier if you have a child together OR if you assume care and control of your partner's child. 

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/prsnl-nf/mrtl-eng.html


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## downloadduckss (Aug 5, 2011)

MoneyGal said:


> Whether you get married legally or not, CRA will consider you married for tax purposes after you have lived together in a conjugal (= spouse-like) relationship for 12 continuous months -- OR earlier if you have a child together OR if you assume care and control of your partner's child.
> 
> http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/prsnl-nf/mrtl-eng.html


Thanks for clarifying on the legalities of marital status for tax purposes.

My question is pertaining to the Pros & Cons of being "single" VS being in a "conjugal relationship" for tax purposes given our financial situations.

Thanks again.
DD


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## MoneyGal (Apr 24, 2009)

The main consequence is that various social benefits - the Canada Child Tax Benefit and the GST credit - are calculated on a household basis, not individually, for married couples (whether common-law, legal, or married for tax purposes only). 

There are a number of other tax consequences as well, such as the capacity to pool some deductions (i.e., medical), spousal RRSPs, etc. 

However, as I said, this is not really an issue over which you have any discretion, so I'm not sure of the value of typing out a list of "pros" and "cons."


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## Homerhomer (Oct 18, 2010)

With both spouses making money there is no tax benefit that I can think of, the tax credits however are calculated on family income, if you were benefiting from it at all before marriage, you will now benefit from them even less.

Stay single my friend ;-)


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## canehdianman (Apr 7, 2009)

Being single or being in a conjugal relationship is not a choice.

Either you meet the definition for conjugal or you do not. It's not optional.


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## CanadianCapitalist (Mar 31, 2009)

My understanding is that if you get legally married abroad, you are *usually* considered married here as well. As others have pointed out, you don't have an option now. You have to include your spouse's details in your tax return.


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## MoneyGal (Apr 24, 2009)

CanadianCapitalist said:


> My understanding is that *if you get legally married abroad, you are considered married here as well*.


Unless it is a polygamous marriage (recognized in various different parts of the world, including west Africa and the Middle East). 

Here is a really good article - from The Walrus magazine - on the problems presented by polygamous marriage in Canada. 

On one hand, in places like Bountiful, B.C., multiple polygamous marriages allow true household income to be concealed from the state, leading to high welfare claims in a practice known (in that community) as "bleeding the beast." 

On the other, crafting some way to recognize polygamous marriage within Canada's legal and social benefits system will make the changes associated with recognizing same-sex marriage look like child's play (never mind the challenges of polygamous divorce!)

(Is there an award for the post which takes the original post most off-course? I'd like to enter this post in the running)


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## Causalien (Apr 4, 2009)

What are the consequences of tax on couples who are divorced and still living together. I've heard usages of this technique before from immigrants of other country who cares not about a piece of paper.


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## MoneyGal (Apr 24, 2009)

Divorced and still living together = not married (for tax purposes), because you are not in a "conjugal" relationship. Instead, you are more like roommates. 

Marriage is an economic partnership from the point of view of CRA and tax law. Divorce is (partly) the act of severing the economic partnership. However, CRA will still get involved if there are social benefits potentially being gamed.


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## downloadduckss (Aug 5, 2011)

canehdianman said:


> Being single or being in a conjugal relationship is not a choice.
> 
> Either you meet the definition for conjugal or you do not. It's not optional.


Would anyone have an idea of what is CRA's definition of a "conjugal relationship"?


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## MoneyGal (Apr 24, 2009)

The Tax Court deals with cases on this issue every year. Here are the seven factors they often use in assessing whether a couple is in a conjugal relationship or not:

Shelter: Do the parties live under the same roof and what are the sleeping arrangements? 

Sexual and personal behaviour: Do the parties have sexual relations and do they maintain an attitude of fidelity to each other? 

Services: What is the conduct and habit of the parties in relation to domestic services, such as preparing meals and performing household maintenance? 

Social: Do the parties participate together in social activities? 

Societal: How does the community view the parties, both individually and as a couple? 

Economic support: What are the financial arrangements of the parties in terms of their relationship? 

Children: What is the attitude and conduct of the parties concerning any children? 

In assessing a specific case, the CRA or a judge would consider the above factors to determine whether or not a couple is involved in a conjugal relationship, however, *the final determination is always a question of fact*. 

Now, I don't know about anyone else, but I'm not letting CRA in my bedroom. 

There is one funny case, Roby v. The Queen, from 2001 in which one of the factors that the judge looked at was the frequency of sexual relations.

Quoting from an article on the case:

The issue in this case was whether the taxpayer, Mr. Roby, should have been entitled to the equivalent of spouse amount, child tax benefits, GST credits and childcare expense deductions during 1997, 1998 and 1999. 

Mr. and Mrs. Roby were married and seven years later, after they had three children together, the marriage turned sour. He claimed that at this point, he and his wife were "living separate and apart ... by reason of the breakdown of his marriage" even though they were living in the same house for the sake of the children. 

The frequency of sexual relations came up in the testimony. "Sexual relations continued between the two of them, although the evidence is contrary about the frequency. The husband admitted to four times in 1998 to 2000 while Ms. Roby said that they had sexual intercourse regularly in the period in question". 

Although the judge didn't comment on whether or not three or four times in a year was considered "regularly", he felt that "such activity casts some doubt on both the separation of the spouses and the breakdown of the marriage". 

*The judge denied Mr. Roby's appeal*, concluding that the couple was not living separate and apart and that the marriage had not broken down, although, in his words, "it was unquestionably fragile".


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## Plugging Along (Jan 3, 2011)

I remember one of my ow tiers was claiming that his girlfriend and he were just roommates instead of common law. CRA actually went into their apartment to see what the living arrangements were. They checked to see if they had separate bedrooms, bank accounts, how there was a division of labour for housework, bills, etc. They interviewed there family and friends too.

He actually had to change their computer room in her bedroom and get ball the stuff for it in a short time like two days. He got through the audit, but it seemed like a lot of work. I think they broke up not too long after that anyways.


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## Young&Ambitious (Aug 11, 2010)

Wow PluggingAlong - that's crazy! Who would have that they would have taken an audit that far


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