18 January 2002 Internal T.I. 2001-0114117 - MEANING OF SPOUSE-SEPARATION

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 CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues:

Prior to 2001, if a couple in a common-law relationship suffers a breakdown in their relationship for a period of less than 90 days, does the supporting "spouse" have to include the other "spouse's" net income earned during the period of separation when calculating the spousal amount pursuant to paragraph 118(1)(a)?

Position:

No.

Reasons:

The postamble to paragraph 252(4)(a) is only applicable in interpreting that paragraph. In other words, it is only used to determine if, for purposes of the Act, two people are deemed to be married. Once an individual's status as a "married" or "single person" has been established, then their entitlement to personal tax credits, child tax benefits, etc. can be determined.

January 18, 2002

	Saint John Tax Services Office		HEADQUARTERS
								Terry Young, CA
	Attention: Debbie Ferguson			952-1506
	           Client Services Division

								2001-011411

Paragraph 118(1)(a) of the Income Tax Act (the "Act") - Spousal Amount

We are replying to your email of December 6, 2001, concerning the calculation of the spousal amount pursuant to paragraph 118(1)(a) of the Act for years prior to 2001 in situations involving the breakdown of common-law partnerships lasting less than 90 days.

In your opinion, in situations where two common-law spouses were living separate and apart on December 31 as the result of a breakdown in their relationship, but the breakdown lasted less than 90 days, the income of the spouse being claimed under paragraph 118(1)(a) would not include the income earned while they were living separate and apart. You referred to technical interpretations 9801987 and 9405687 in support of your position.

You also noted that the 1999 T1 Guide stated:

If you separated in 1999 because of a breakdown in your relationship, and were not back together on December 31, 1999, reduce your claim only by your spouse's net income before the separation. For a common-law spouse, you also have to be separated for at least 90 days.

Following the instructions in the T1 Guide, the common-law spouse's income for the entire year would be included in the calculation because the couple were not separated for at least 90 days.

You have asked us to clarify the issue.

To highlight your concerns, you provided the following hypothetical case:

Mary and Joseph have been residing together in a common-law situation since March 1995, except for the period between November 15, 1999, and January 15, 2000, when they lived separate and apart as the result of a breakdown in their relationship. From January 1, 1999, until November 15, 1999, Mary earned no income. From November 16, 1999, to the end of the year, she earned net income of $9,000. You have asked us if John would be able to claim the spousal amount pursuant to paragraph 118(1)(a) of the Act.

Our Comments

Paragraph 252(4)(a) as it applied to 1999 read:

(4) Idem - In this Act,

(a) words referring to a spouse at any time of a taxpayer include the person of the opposite sex who cohabits at that time with the taxpayer in a conjugal relationship and

(i) has so cohabited with the taxpayer throughout a 12-month period ending before that time, or

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

and, for the purposes of this paragraph, where at any time the taxpayer and the person cohabit in a conjugal relationship, they shall, at any particular time after that time, be 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;(our emphasis)

The postamble to paragraph 252(4)(a) is only applicable in interpreting that paragraph. In other words, it is only used to determine if, for purposes of the Act, two people are deemed to be married. In your example, for the purpose of determining if Mary and Joseph are married, they are deemed to have lived together continuously since March 1995. Therefore, they satisfy the requirements of subparagraph 252(4)(a)(i) and are deemed to be married for purposes of the Act.

Once an individual's status as a "married" or "single person" has been established, then their entitlement to personal tax credits, child tax benefits, etc. can be determined. In your example, since Mary and Joseph were, in fact, living separate and apart on December 31, 1999, by reason of a breakdown of their "marriage", when calculating John's claim for the spousal amount in paragraph 118(1)(a), he would only include Mary's net income prior to their separation on November 15 (i.e., nil). As a result, he would be able to claim a spousal amount of $972 (17% x $5,718) for 1999.

With respect to 2001 and subsequent years, the calculation of Variable C remains the same. The definition of common-law partner in subsection 248(1) includes similar wording to former paragraph 252(4)(a). The postamble of the definition states, in part, "... and, for the purposes of this definition, ...".

We trust that our comments will be of assistance.

John Oulton, CA
Manager, Business and Individual Section
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch