# To be or Not to be Common-law



## Sharon (Oct 16, 2014)

Hi, I been living with my boyfriend in his home from the time he purchased (I am not on the deed). I live in Ontario, as so far we not claimed common-law on our taxes, we file separate. We talked about it, he didn't want to, said it make his taxes to complicated. Also, he refuse any money from me towards the house. I have no financial support from him as well. So, my question be or not to be Common-law be in my best interest as I plan to retire in 10 or 15 years.


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## newuser (Sep 16, 2014)

Sharon said:


> Hi, I been living with my boyfriend in his home from the time he purchased (I am not on the deed). I live in Ontario, as so far we not claimed common-law on our taxes, we file separate. We talked about it, he didn't want to, said it make his taxes to complicated. Also, he refuse any money from me towards the house. I have no financial support from him as well. So, my question be or not to be Common-law be in my best interest as I plan to retire in 10 or 15 years.


Whether or not you or he claims to be common-law doesn't matter since the law of the province governs whether you're common-law or not. In Canada, everyone files separate -- married or not. There are not many large benefits to being married or common law for taxes, but there is a huge disadvantage regarding property and primary residence capital gains exemption. Google is your teacher to learn about tax and marriage in Canada -- just ignore the US results.

You as a couple obviously have some communications issues though. I suggest you work that out first before worrying about tax implications.


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## cainvest (May 1, 2013)

newuser said:


> Whether or not you or he claims to be common-law doesn't matter since the law of the province governs whether you're common-law or not.


^^ This.

If you fit the criteria for common law in your province then you file as common law otherwise, if they catch you, you have to potentially pay up at a later date.


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## OptsyEagle (Nov 29, 2009)

Although the other posters are correct in that this election is not really a choice, in my opinion, it is very unlikely that the Government of Canada is going to enter the bedrooms of Canadians to determine if their relationships are conjugal or not.

So with that said, it is my opinion, that being married reduces the tax benefits and other things one would get from the government, since many programs use "family" income for their eligibility and that will almost always be higher then each of your incomes separately. So no, do not declare yourself common law married.

That is my opinion.


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## peterk (May 16, 2010)

Was answering... but I think this is a troll job. 3 posts all about the same topic for a brand new member?

On the off chance this is genuine: It's seems clear that he doesn't want to be common law. It's not hard to fill out the tax forms. Him not accepting your money is probably an attempt to makes sure it's clear the house is "his" upon separation. This of course will bite him in the *** hard, when he finds out that you'll still get what's coming to you AND he didn't get any of your money along the way... You coming on the forum asking these questions about what is in "my" best interests at the expense of your partner is not in very good taste...


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## cainvest (May 1, 2013)

OptsyEagle said:


> Although the other posters are correct in that this election is not really a choice, in my opinion, it is very unlikely that the Government of Canada is going to enter the bedrooms of Canadians to determine if their relationships are conjugal or not.


While this is just third/forth hand information so take it with many grains of salt .... I believe they'll call you in for an audit after staying at the same address with someone for a period of time dependng on the province. After that, it's up to you to prove you're not common law ... you know, guilty till proven innocent.


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## Plugging Along (Jan 3, 2011)

OptsyEagle said:


> Although the other posters are correct in that this election is not really a choice, in my opinion, it is very unlikely that the Government of Canada is going to enter the bedrooms of Canadians to determine if their relationships are conjugal or not.
> 
> So with that said, it is my opinion, that being married reduces the tax benefits and other things one would get from the government, since many programs use "family" income for their eligibility and that will almost always be higher then each of your incomes separately. So no, do not declare yourself common law married.
> 
> That is my opinion.


Actually, not true. I have witnessed a case where a coworker was living common law with his girlfriend. She was applying for some benefits (can't remember which ones) which she would be eligible for if it was just her income, but not as common law.

During the audit, the auditor went to their apartment checked the rooms to see if there separate rooms and beds, checked the bank accounts for joint bank accounts, went to our place of work (hence how I know) asked coworkers what the relationship was. I was quite surprised that this happened.


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## MrMatt (Dec 21, 2011)

If' you've been living together for 12 months in a conjugal relationship, you're common law for the purposes of federal tax.
I agree with the other poster, you have communication issues in your relationship.

You're clearly both financially independent.
The question you need to ask is if this relationship is in your best interest.


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## AltaRed (Jun 8, 2009)

Plugging Along said:


> Actually, not true. I have witnessed a case where a coworker was living common law with his girlfriend. She was applying for some benefits (can't remember which ones) which she would be eligible for if it was just her income, but not as common law.
> 
> During the audit, the auditor went to their apartment checked the rooms to see if there separate rooms and beds, checked the bank accounts for joint bank accounts, went to our place of work (hence how I know) asked coworkers what the relationship was. I was quite surprised that this happened.


Very true. The issue often arises when an individual applies for benefits such as the GST/HST credit which relies on family income. CRA's computers flag returns from the same address. It often happens when people are simply roommates, not conjugal, and the roomies have to go through many hoops to prove they are not in conjugal relationships.

As already said, there is one definition of common law for tax purposes (one year) and another (provincial) definition under family law. Depending on the province, a conjugal relationship is considered common law after 2 or 3 years (2 in BC where I live). The couple in this case do not make that decision - it is made for them. and in the absence of a cohabitation agreement, the courts in the province of question will decide what is fair in a split.


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## OhGreatGuru (May 24, 2009)

As has been stated, whether or not one is a common-law spouse is question of fact, not choice. Declaring a common-law relationship shouldn't complicate taxes. Refusing to declare one could lead to an audit for tax fraud if one is abusing the tax system by misrepresenting oneself as single. (One very common fraud would be if both parties had minor children - by claiming to be single they could each claim a substantial tax credit under Line 305 of Schedule 1 for "Eligible Dependents"). Reading between the lines I suspect BF is more concerned about whether formally recognizing the relationship would convey some property rights to you. (admittedly conjecture on my part) At one time common-law spouses had no rights to property, only child support. But the laws are changing in all provinces. And in all cases the question of whether or not you are common-law spouses would be a matter of fact, not whether or not he ever admitted the relationship. Filing tax returns as common law simply makes it easier to establish the facts if it should ever become an issue.

More and more common-law spouses are being encouraged to enter into legal co-habitation agreements to deal with issues such as division of property, distinguishing between assets acquired before/after the relationship, pension entitlements, etc., in case the relationship breaks up. This needs to be done with a lawyer to make sure the agreement does not contradict the changing provincial laws.

(I know of one instance in Ontario where a lawyer insisted that the parties had to be represented by separate lawyers, arguing that she could not fairly represent the interests of both parties. I find this a disturbing trend, that automatically adds an adversarial aspect to what should be a mutual agreement.)


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## gardner (Feb 13, 2014)

If income splitting ever comes to town, I bet the CRA will get very particular about common-law arrangements.


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## AltaRed (Jun 8, 2009)

OhGreatGuru said:


> (I know of one instance in Ontario where a lawyer insisted that the parties had to be represented by separate lawyers, arguing that she could not fairly represent the interests of both parties. I find this a disturbing trend, that automatically adds an adversarial aspect to what should be a mutual agreement.)


I would think the issue of 1 vs 2 lawyers may depend on how equal, or unequal, the relationship is wrt assets, income, stage of life, and whether children are involved. There clearly had to be 2 lawyers in the cohab I am party too [empty nester with considerable financial assets/pensions].


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## Guban (Jul 5, 2011)

OhGreatGuru said:


> (One very common fraud would be if both parties had minor children - by claiming to be single they could each claim a substantial tax credit under Line 305 of Schedule 1 for "Eligible Dependents").


The government must have encountered this problem, and has eliminated this possibility. They only allow one child per dwelling. 

See the third bullet in:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/305/sttns-eng.html


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## OhGreatGuru (May 24, 2009)

Thanks for pointing that out.


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## Addy (Mar 12, 2010)

CRA audited me and a former (male) room mate and switched us both to "married" (common law). Interesting thing was, we were not in a relationship. In fact, I was dating a woman at the time and we were considering getting married... CRA presumed because I have girl parts and he has boy parts and we were under the same roof, we had to be in a relationship. Bastards.


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## heyjude (May 16, 2009)

Addy said:


> CRA audited me and a former (male) room mate and switched us both to "married" (common law). Interesting thing was, we were not in a relationship. In fact, I was dating a woman at the time and we were considering getting married... CRA presumed because I have girl parts and he has boy parts and we were under the same roof, we had to be in a relationship. Bastards.


But.....I thought Pierre Trudeau said that the State has no business in the bedrooms of the nation!


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## AltaRed (Jun 8, 2009)

Addy said:


> CRA audited me and a former (male) room mate and switched us both to "married" (common law). Interesting thing was, we were not in a relationship. In fact, I was dating a woman at the time and we were considering getting married... CRA presumed because I have girl parts and he has boy parts and we were under the same roof, we had to be in a relationship. Bastards.


There have been many instances of this happening and it takes some effort to get it reversed. But looking at the bigger picture, it is hard to fault CRA in its suspicions. We probably all know people who live under the same roof and file as single just to capture certain benefits based on their own individual income rather than family income. I suspect there are tens of thousands trying to pull this off and it is to the benefit of taxpayers as a whole for CRA to go knocking on those doors.


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## Addy (Mar 12, 2010)

AltaRed said:


> There have been many instances of this happening and it takes some effort to get it reversed. But looking at the bigger picture, it is hard to fault CRA in its suspicions. We probably all know people who live under the same roof and file as single just to capture certain benefits based on their own individual income rather than family income. I suspect there are tens of thousands trying to pull this off and it is to the benefit of taxpayers as a whole for CRA to go knocking on those doors.


I partially understand, but then again, CRA is making assumptions. If you go with that line of thought, I can shack up with my girlfriend and both of us file as single… and I hazard a guess that CRA would never put their neck out so far as to audit us and change our information to common law!!

CRA is discriminating against heterosexuals!


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## Taraz (Nov 24, 2013)

Guban said:


> The government must have encountered this problem, and has eliminated this possibility. They only allow one child per dwelling.
> 
> See the third bullet in:
> http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/305/sttns-eng.html


So you get two houses (one principal residence each). At least, if real estate wasn't so overvalued right now that would be a good deal. Then each of you would get the principal residence capital gains exemption as well (double win!).


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## Taraz (Nov 24, 2013)

AltaRed said:


> There have been many instances of this happening and it takes some effort to get it reversed. But looking at the bigger picture, it is hard to fault CRA in its suspicions. We probably all know people who live under the same roof and file as single just to capture certain benefits based on their own individual income rather than family income. I suspect there are tens of thousands trying to pull this off and it is to the benefit of taxpayers as a whole for CRA to go knocking on those doors.


The logical solution would be to treat everyone equally regardless of marital status (married, common law, or single) and sexual preference (gay, straight, bi, poly). 

I actually find it quite offensive that the goverment delves so far into our bedrooms. If someone wants to be in a poly relationship, for example, shouldn't they have the same rights and responsibilities as a mono couple? It makes me want to go find a financially stable, stay-at-home lesbian hotty to be my surrogate (since it's not legal to surrogates in Canada). Then my common-law boyfriend and I could divide the kids and reap the financial benefits of being "single", since you can only be common law with one person at a time.


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## AltaRed (Jun 8, 2009)

The issue is not who consitutes a couple, mono, poly, or otherwise. I don't care how many people, or gender, are living together in a conjugal relationship. The issue is income tested benefits. If 2 or more people are living together in a conjugal relationship (whether hetero, gay, lesbian, or?), they are generally sharing income and/or costs on some agreed upon basis. Why should the low income 'spouse' of the conjugal couple receive low income benefits, e.g. HST/GST credit, while the other 'spouse' is making $100k per year? 

CRA rightfully, on behalf of the taxpayer, needs to be sure individuals claiming single, but actually living together in a conjugal relationship, are not ripping off the taxpayer. I support the CRA's effort to eliminate fraud but the question is tactics. The alternative is to eliminate income tested benefits altogether.

The way around this is for people to live apart at different addresses, whether in a conjugal relationship or not. But that will cost more than the family income related benefits anyway.


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