4 June 2002 External T.I. 2001-0109545 - Former Common Law Partner

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: The application of section 160, including subsection 160(4), where at the time of the transfer of property the common-law partner relationship has ceased and the property is transferred pursuant to a decree, order, judgment or written separation agreement.

Position: In this situation, it section 160 and subsection 160(4) would not apply unless the common-law partner relationship resumes.

Reasons: The application of the law based on the specific facts.

XXXXXXXXXX 2001-010954

June 4, 2002

Dear XXXXXXXXXX:

Re: Application of Section 160 to "Former" Common-Law Partners

We are writing in reply to your facsimile letter of November 8, 2001 wherein you requested our opinion regarding the application of subsections 160(1) and 160(4) of the Income Tax Act (the "Act").

At issue in the situation described in your letter is the application of the joint and several liability of a transferee for the transferor's tax liabilities under section 160 where property is transferred between two individuals at a time when two individuals no longer cohabited with each other in a conjugal relationship for a period of at least 90 days as a result of the breakdown of their conjugal relationship. You indicate that as a consequence of the breakdown of their conjugal relationship the property was transferred pursuant to a decree, order, judgment of a competent tribunal or pursuant to a written separation agreement.

It is your view that, absent the possible application of paragraphs 160(1)(b) and (c), the rules of section 160 would not apply in your situation because the two individuals would not be common-law partners at the particular time the transfer of property was made. You ask whether we concur with your views.

Your request appears to relate to a proposed transaction or a completed transaction. Confirmation of the income tax consequences of proposed transactions involving specific taxpayers will only be provided in response to a request for an advance income tax ruling. To make such a request the advance income tax ruling must be submitted in accordance with the guidelines set out in Information Circular 70-6R4 ("IC-70-6R4") dated January 29, 2001. However, if the situation relates to a completed transaction a request for the Canada Customs and Revenue Agency's views must be made to your local Tax Services Office. We can, however, provide the following general comments.

The term "common-law partner" is defined in subsection 248(1) as follows:

"With respect to a taxpayer at any time, means a person who cohabits at that time with the taxpayer in a conjugal relationship and

(a) has so cohabited with the taxpayer for a continuous period for at least one year, or

(b) would be a parent of a child of whom the taxpayer would be a parent, if this Act were read without reference to paragraphs 252(1)(c) and (e) and subparagraph 252(2)(a)(iii),

and, for the purposes of this definition, where at any time the taxpayer and the person cohabit in a conjugal relationship, they are, at any particular time after that time, deemed to be cohabiting in a conjugal relationship unless they were not cohabiting at the particular time for a period of at least 90 days that includes the particular time because of a breakdown of their conjugal relationship."

Based on the above, and absent the possible application of paragraphs 160(1)(b) and (c), where property is transferred between two individuals who are no longer common-law partners at that time, paragraph 160(1)(a) would not apply. However, if the two individuals later resumed their common-law partner relationship paragraph 160(1)(a) could apply to that transfer of property.

Our comments are provided in accordance with the practice outlined in paragraph 22 of IC-70-6R4.

Yours truly,

for Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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