Canada’s Tax Rules For Couples

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It is no secret that understanding Canada’s tax rules can be quite a challenge at times. But apparently, dealing with them could even be more challenging if you’re going to factor in your personal relationships into the equation.

According to a recent survey conducted by Leger on behalf of H&R Block Canada, more than half of Canadians mistakenly think that married and common-law spouses can file a joint return to save money on their taxes. About 40% believe it’s up to them to decide whether to claim their marital status on their tax returns, while a number of respondents are not that sure if the Canada Revenue Agency (CRA) has guidelines to determine their status.

While Canada’s tax rules involving your marital status can be confusing, many experts agree that it is very important that you the understand them. Otherwise, it could cost you money and get you into trouble. Here’s some nifty information you should know so you can better navigate your way through the country’s tax system.

1. Tax payers file individually, regardless of marital status.

In Canada, tax payers file individually whether they are living in a common-law relationship or married. Family incomes in the country are not combined for the purpose of calculating tax. But in some instances, they can be combined, usually for the purpose of calculating income-tested benefits such as the GST/HST credit or the National Child Benefit support.

However, this doesn’t mean that tax payers can lie about their marriage status. Couples are required by law to check the appropriate status box in tax forms. If they lie, they are committing tax fraud.

2. Rules about common-law relationships

To be considered common-law, couples must live together in a conjugal relationship for 12 months or immediately if they have a child together. If one of them is receiving benefits that they are not entitled to because of an incorrect marital status, they will be required to repay them.

3. Pay your taxes on time

Canadian tax payers must pay their dues on time. With the April 30 filing deadline just a couple of months away, they must avoid waiting until the last minute. Couples are also advised to pay taxes at the same time so they can take full advantage of all the benefits and credits available.

4. Once you have filed as married, you can never claim single.

Many Canadians believe that once they are divorced, they can claim as single the following year. However, this isn’t exactly how things go. Once they have filed as married, they can never claim single. Instead, they will be classified as separated, divorced, or widowed.

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