Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Are financial institutions required to obtain written documentation where a common-law relationship breaks down before proceeding with the various tax-deferred transfers that are permitted under the Income Tax Act (e.g. transfer of an RRSP under 146(16)(b))?
Position: Positions expressed in CCRA publications such as paragraph 5 of IT-528 (dated February 21, 1997) will be now extended to common-law partners unless that position has been changed by a later CCRA publication.
Reasons: Effective for the 2001 taxation year, common-law partners will generally have the same status under the Income Tax Act as spouses (i.e. married individuals).
XXXXXXXXXX 2001-008440
G. Kauppinen
June 28, 2001
Dear XXXXXXXXXX:
Re: Registered Retirement Savings Plans ("RRSP")
- Tax- Deferred Transfers on Marriage Breakdown
This is in reply to your facsimile transmission dated May 15, 2001 regarding the recognition of same-sex partners under the Income Tax Act ("Act") effective for the 2001 taxation year.
You ask whether the standard used by the Canada Customs and Revenue Agency ("CCRA") for determining marriage breakdown will be more stringent than the standard required for common- law separation. You specifically ask whether the requirement for written evidence of separation in respect of a transfer under paragraph 146(16)(b) of the Act extends to partners who were not married but were common-law partners under the Act.
Opinions concerning proposed transactions involving specific taxpayers will only be provided in response to a request for an advance income tax ruling. For more information concerning advance tax rulings, please refer to Information Circular 70-6R4 dated January 29, 2001, issued by the CCRA. Copies of information circulars and interpretation bulletins are available from your local tax services office or on the Internet at the following site - http://www.ccra-adrc.gc.ca/formspubs/menu-e.html. However, we can provide you with the following general comments.
The term "spouse" is not defined in the Act. However, subsection 252(3) of the Act states that, for certain specific provisions of the Act, "spouse" and "former spouse" of a particular individual include another individual of the opposite sex who is a party to a voidable or void marriage with the particular individual. Generally, the CCRA has taken the position that the term "spouse" is restricted to persons that are legally married. However, beginning with the 2001 taxation year the terms "common-law partner" and "common law partnership" have been added to the definitions contained in subsection 248(1) of the Act (which are applicable to the entire Act). Under these definitions, a common-law partner includes a person who has cohabitated with a taxpayer in a conjugal relationship for a continuous period of at least one year.
The terms "common-law partner" and "common-law partnership" have generally been added throughout the Act wherever the word "spouse" and its extensions (e.g., spouses, spousal) are found. Consequently, the provisions of the Act which were formerly restricted to a "spouse" and "spouses" (i.e., legally married persons) have been extended to persons who meet the new definitions, including unmarried same-sex couples.
Generally, for purposes of the Act, under our self-assessing system, the responsibility for the correct declaration of status is that of the individual taxpayer.
However, under some provisions of the Act, written documentation of a separation is required as evidence to support certain transactions. For example, a transfer of funds under paragraph 146(16)(b) of the Act, formerly restricted to "spouses" and "former spouses", will now be allowed in settlement of rights arising out of, or on the breakdown of a common-law partnership. In paragraph 146(16)(b) of the Act, the words "common-law partner" have simply been added to the text immediately after the word "spouse", so that the requirement that the payment or transfer be made under a decree, order or judgment of a competent tribunal, or under a written separation agreement is still a requirement where the parties to the relationship were common-law partners.
In general, CCRA published positions in respect of spouses should now extend to common-law partners and common-law partnerships unless specifically over-ridden by a more recent publication.
We trust our comments will be of assistance to you.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2001
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2001
Email this Content