Living together in a committed relationship has legal and financial consequences in Canada, especially when it comes to taxes. If you and your partner meet the Canada Revenue Agency’s (CRA) definition of common law, you may need to declare your status, adjust how you file taxes, and understand how this affects benefits and obligations.
This guide explains what common law means for your taxes in Canada, how to declare your status, and what to expect if your relationship ends.
What Is Common Law?
Common Law Status
In Canada, common law generally means that two people live together in a marriage-like relationship but are not legally married. For tax purposes, the CRA recognizes you as common law if you have:
- Lived together in a conjugal relationship for 12 continuous months, or
- Had a child together (by birth or adoption), or
- Shared custody of a child.
This means your relationship might be considered common law even without a formal agreement.
Canada Revenue Agency (CRA) Common Law Definition
The CRA’s definition is important because it determines how you file your taxes, whether you qualify for certain benefits, and how your finances are assessed. You can find the CRA’s exact wording in the Income Tax Act.
Declaring Common Law to the CRA
Once you meet the definition of common law, you must update your marital status with the CRA. This can be done through:
- Your CRA My Account online portal
- Completing Form RC65 (Marital Status Change)
- Contacting the CRA directly by phone
Failing to declare your status can lead to problems. If you continue receiving benefits or credits you’re no longer entitled to, the CRA may require you to repay those amounts with interest.
CRA Common Law Tax Filing
Contrary to common belief, common-law partners do not file a joint tax return in Canada. Instead, each partner files an individual return, but you must include your partner’s information on your tax form.
This matters because:
- Your partner’s income may affect your eligibility for benefits like the GST/HST credit or the Canada Child Benefit (CCB).
- Deductions and credits, such as tuition transfers or medical expenses, may be shared or transferred between partners.
- Pension income splitting is available to both married and common-law couples.
Common Mistakes in Filing
- Forgetting to update status after one year of living together.
- Not including your partner’s net income, which can delay processing.
- Double-claiming benefits like the CCB when only one parent should.
CRA Common Law Benefits
Being recognized as common law can increase or decrease the benefits you receive, depending on household income.
Potential Advantages
- Canada Child Benefit (CCB): Couples must apply together, but this can streamline payments.
- Pension Splitting: Retired couples may reduce taxes by splitting pension income.
- Spousal Amount Credit: If your partner earns below a certain threshold, you may be able to claim a credit.
- Disability Tax Credit Transfer: Can be transferred between partners.
Possible Drawbacks
- Reduced GST/HST Credit: Your combined income may push you above the threshold.
- Lower CCB Payments: Higher household income can reduce benefits.
In short, declaring common-law status ties your financial picture to your partner’s, for better or worse.
CRA Common Law Separation
If you and your partner separate for 90 consecutive days or more, the CRA no longer considers you common law. You must inform the CRA of this change.
This affects:
- Eligibility for CCB, GST/HST, and other benefits
- How income is assessed for future tax years
- Your ability to claim certain credits
Failing to report a separation can mean missed benefits or overpayments you’ll have to repay later.
Provincial Variations vs. Federal (CRA) Rules
While the CRA sets the federal definition of common law for tax purposes, provinces have their own rules for family law, property division, and estate rights.
For example:
- Ontario: Common-law partners do not automatically share property rights, but may make claims under unjust enrichment.
- British Columbia: After two years of living together, common-law partners are treated much like married couples under the Family Law Act.
- Alberta: Common-law partners may be recognized as Adult Interdependent Partners after three years of cohabitation (or less with children).
This means you could be common law for tax purposes federally but not for property division provincially, or vice versa. That’s why it’s important to understand both systems.
Check out our Learning Centre to find out the rules for common law property division in your province.
FAQs
Do common-law partners file taxes together in Canada?
No. Each partner files separately, but you must include your partner’s income and marital status details.
What happens if I don’t declare my common-law status to CRA?
You may be overpaid in benefits or credits and will likely have to repay them, with penalties or interest.
What happens if my common-law relationship ends?
If you separate for 90 days or more, you must inform the CRA so your benefits and tax obligations are recalculated.
Protecting Your Future With Agreements
Taxes are just one part of common-law relationships. Property division, estate planning, and support obligations for common-law couples are not consistent across Canada. The best way to avoid conflict later is to make a clear agreement early in your relationship.
With Jointly, you can create a cohabitation agreement online that outlines financial expectations, property division, and support, both during your relationship and if it ends.
???? Start your cohabitation agreement today with Jointly and take control of your financial future.
