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:
Where common-law spouses separate for a period less than 90 days during the year, would the spouses be eligible for the equivalent to spouse credit?
Position:
Yes.
Reasons:
252(4)(a) states: "for the purposes of this paragraph", and not the Act as a whole; therefore, length of separation is relevant for spousal determination only (also see E9405687).
March 11, 1998
PETERBOROUGH TAX SERVICES OFFICE HEADQUARTERS
Attention: Suzanne Burden A. St-Amour
Training coordinator (613) 957-8953
7-980198
Equivalent-to-spouse tax credit provided in paragraph 118(1)(b) of the Income Tax Act (the "Act") - Extended meaning of "spouse" in subsection 252(4) of the Act
This is in response to your memorandum of January 26, 1998, requesting our opinion on an hypothetical situation dealing with the tax credits allowed under paragraphs 118(1)(a) and (b) of the Act.
The facts as you describe them are as follows:
1.Steve and Marie started living in a common law relationship in October 1996. They decided to stop living together on June 5 1997 and shortly after, July 29, 1997 decided to get back together. They have been living in a common law relationship since.
2.Marie had a daughter from a previous relationship. During the separation period, Marie solely supported her daughter. Prior to 1997, Mary always claimed the equivalent-to-spouse tax credit for her daughter. For 1997, she still wants to claim the equivalent-to-spouse tax credit for her daughter.
Your concerns:
You are of the view that there could be an abuse where common law couples could separate for a period of less than 90 days and continue to claim the equivalent-to-spouse tax credit for the period of separation. This could happen year after year until caught by the Department. You are of the view that this probable abuse stems from the recent amendment to the Act which allows an individual, in the year the individual divorces, separates from a spouse or separates and returns in the relationship in the year, to claim either a spousal tax credit in respect of the spouse or an equivalent-to-spouse tax credit in respect of a dependent child residing with the individual.
Subsection 252(4) of the Act was introduced, effective for the 1993 and subsequent taxation years, to ensure that common-law couples are treated the same way as married couples under the tax system.
The purpose of paragraph 252(4)(a) of the Act is to determine whether a particular individual can be considered a spouse in relation to the taxpayer for the general purposes of the Act. As you are aware, subsection 252(4) extends the definition of "spouse" to include parties to a common-law relationship as long as the criteria set out in that provision are met. In order to establish a spousal relationship, paragraph 252(4)(a) requires that the individuals (of the opposite sex) cohabit in a conjugal relationship and either so cohabit throughout a 12-month period or that each be a parent of a child of whom the other is a parent.
In circumstances where, at the particular time, the couple is not actually cohabiting due to a breakdown in their conjugal relationship, the remainder of paragraph 252(4)(a) of the Act provides further guidelines to assist our determination. Where the parties, at any time (prior to the particular time) cohabited in a conjugal relationship but then ceased cohabiting due to a breakdown in that relationship for a period of less than 90 days, it will deem them to have continued to cohabit in a conjugal relationship throughout that short period; i.e., the continuity of cohabitation in a conjugal relationship for purposes of the 12-month test will not be disturbed. This "deemed cohabitation" applies not only for purposes of establishing whether the parties have cohabited in a conjugal relationship throughout a 12-month period in the past but also whether they are continuing to so cohabit at the particular time.
Once the individual's status as a "married" or "single person" has been established, then their entitlement to personal credits, child tax benefits, etc... can be determined. It should be emphasized that the "deemed cohabitation" referred to earlier, for periods of less than 90 days, is limited to the purposes of paragraph 252(4)(a) only; that is, only for the purposes of determining whether a spousal relationship exists as at a particular time for the purposes of the Act in general. Consequently, where a common law couple actually lives separate and apart, they will be treated as living separate and apart for purposes of certain of the other provisions of the Act. For example, the status of actually living separate and apart will have to be considered for purposes of administering the personal credits available under paragraphs 118(1)(a) and (b).
Paragraph 17 of Interpretation Bulletin IT-513R states that if an individual is living separate and apart from his or her spouse because of a breakdown of their marriage, but such spouses reconcile during a taxation year, the individual may be able to claim the equivalent-to-spouse tax credit for the year of reconciliation provided the individual does not claim the spousal tax credit for the year and other requirements to claim the equivalent-to-spouse tax credit are met. We are of the view that the term "marriage" in the previous sentence includes a conjugal relationship in which two individuals of the opposite sex are considered to be spouses according to paragraph 252(4)(a). Under paragraph 252(4)(b), a marriage includes a conjugal relationship in which two individuals of the opposite sex are considered to be spouses according to paragraph 252(4)(a).
Therefore, in the hypothetical situation described above, Marie would be eligible to claim the equivalent-to-spouse tax credit provided she does not claim the spousal tax credit and the other requirements to claim the equivalent-to-spouse tax credit are met.
We hope our comments will be of assistance to you. If you have any other questions do no hesitate to contact A. St-Amour (613) 952-1764.
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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