16 February 1999 External T.I. 9902035 - SPOUSAL TAX CREDIT AND DEPENDANT TAX CREDIT

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 taxpayer and his wife are separated, but are still living under the same roof, since September 1997. The date was legally established during the summer of 1998 when the courts granted the taxpayer custody of their child. The taxpayer indicates that his wife is mentally ill and is essentially being supported by him but that he and his wife live separate lives otherwise. At present, explicit support payments have not been established. Throughout 1998, the taxpayer and his wife lived under the same roof except for the month of November, during which time she stayed at a shelter and the YMCA. His wife received emergency financial aid from Social Services at that time.

1) For purposes of paragraph 118(1)(a)( spousal tax credit ), is the taxpayer considered to be “living separate and apart” from his spouse?

2) If the taxpayer is not considered to be living separate and apart from his wife, can he claim his wife as an infirm dependant pursuant to paragraph 118(1)(e)?

Position:

1) Question of fact whether the taxpayer and his spouse are living separate and apart for purposes of paragraph 118(1)(a) of the Act. If he is living separate and apart from his wife, then he cannot claim her for the spousal tax credit.

2) No, assuming that the taxpayer is not considered to be living separate and apart form his wife, the taxpayer can’t claim his wife as an infirm dependant.

Reasons:

1) It is possible for spouses to live separate and apart while occupying the same residence. See jurisprudence below as well as criteria established in context of divorce law. It is a question of fact whether the taxpayer and his spouse are living separate and apart even though they are occupying the same residence.

2) Pursuant to the definition of “dependant” in subsection 118(6) of the Act, “dependant” does not include an infirm spouse.

XXXXXXXXXX 5-990203
G. Moore
February 16, 1999

Dear XXXXXXXXXX:

Re: Spousal Tax Credit and Dependant Tax Credit

This is in reply to your letter of January 22, 1999, in which you requested our comments regarding the spousal tax credit and the dependant tax credit.

As we understand the situation, you and your wife have been separated because of a breakdown of your marriage, but living under the same roof since September 1997. The date was legally established during the summer of 1998 when the courts granted you custody of your child. You have indicated that your wife is mentally ill and has essentially been supported by you but that you and your wife live separate lives otherwise. At present, explicit support payments have not been established. Throughout 1998, your wife lived under the same roof as you except for the month of November, during which time she stayed at a shelter and the YMCA. Your wife received emergency financial aid from Social Services at that time.

You are asking whether you should indicate your marital status as “married” and claim the spousal tax credit in respect of your wife on your 1998 income tax return or whether you should show your marital status as “separated” on your 1998 return and claim your wife as an infirm dependant for the dependant tax credit. You have indicated that you may have difficulty establishing the amount of your wife’s income for 1998 for purposes of the spousal tax credit or the dependant tax credit.

Our Comments

The Department’s general position on personal tax credits is outlined in IT-513R, Personal Tax Credits, which is enclosed for your reference.

Paragraph 118(1)(a) of the Income Tax Act (“the Act”) provides that an individual may claim a spousal tax credit for a year if at any time in the year the individual is married, supports his or her spouse, and is not living separate and apart from that spouse because of a breakdown of their marriage. Since the requirement for claiming the spousal tax credit need only be met at some point in the year, the credit may be available in a year in which a marriage breakdown occurs. However, the credit is not available to an individual who may support his or her spouse through the payment of support amounts in years following the year in which the marriage breakdown occurs and throughout which the two individuals live separate and apart.

It is possible for spouses to live separate and apart while occupying the same residence. This issue was examined by the Tax Court of Canada in The Minister of National Revenue v. Claire L. Longchamps and Fernand Longchamps, 86 DTC 1694, [1986] 2 C.T.C. 2231, and it has also been examined by the courts in the context of divorce law. In divorce cases, the courts look to see whether there is an intent by one or both of the spouses to separate. For example, physical separation without an intention to separate is not sufficient to constitute “living separate and apart”. The courts look at a number of indicators when deciding whether a couple residing in the same residence are nevertheless physically living separate and apart. They look to see if the customary behaviour of the spouses is present such as joint social ventures, communication and discussion of family problems, sexual relations and so on. Of somewhat lesser importance is whether either spouse performs any personal domestic services for the other such as cooking meals or doing laundry. The courts may also look as to why both spouses continue to reside in the same residence if they intended to live separate and apart. In the Longchamps case, the court decided that although living under one roof, the spouses were living separate and apart because the husband could not afford to live elsewhere. In addition, they had separate bedrooms, the wife managed the household and cared for the children, both spouses considered the husband to be a boarder in the home, the husband bought his own food, the spouses did not socialize together and the spouses rarely spoke to each other. The evidence in that case established that while the spouses were living under the same roof, they were pursuing their respective activities as strangers to one another or as if the other did not exist.

Whether two spouses are living separate and apart is a question of fact, and each case must be decided upon its own facts. Accordingly, in your particular case, we cannot comment on whether you and your spouse would be considered to be living separate and apart for the 1998 taxation year. However, given the criteria considered by the courts in making such a determination in divorce cases and in the Longchamps case mentioned above, if you and your spouse were, in fact, considered to be living separate and apart throughout the 1998 taxation year, you would not be entitled to claim the spousal tax credit in respect of your wife for that year.

With respect to the dependant tax credit for an infirm dependant, pursuant to paragraph 118(1)(e) of the Act, an individual may claim a dependant tax credit for each dependant who was 18 years of age or over before the end of the year and dependent on the individual because of mental or physical infirmity. For the purposes of the dependant tax credit, under subsection 118(6) of the Act, a person qualifies as a “dependant” of an individual for a taxation year if the person is dependent on the individual for support at any time in the year and is the child or grandchild of the individual or the individual’s spouse, or a resident in Canada at any time in the year and is the parent, grandparent, brother, sister, uncle, aunt, niece or nephew of the individual or the individual’s spouse. Under proposed law, for 1998 and subsequent taxation years, a new tax credit will be available to individuals who provide in-home care for parents or grandparents who are 65 years of age. As the definition of “dependant” in subsection 118(6) of the Act does not include a spouse, you would not be entitled to claim the dependant tax credit in respect of your wife for the 1998 taxation year whether or not you were considered to be separated from her because of a breakdown of your marriage.

An equivalent-to-spouse tax credit may be claimed in respect of a wholly dependent relative by an individual who does not claim a spousal tax credit for the year and who, at any time in the year, was not married, or was married but did not support nor live with his or her spouse and was not supported by his or her spouse. The wholly dependent person has to be a person who is:

- a resident of Canada (except where the claim is in respect of the individual’s child);

- wholly dependent for support on the individual or the individual and such other persons who jointly maintain the self-contained domestic establishment in which the individual and dependant resides;

- related to the individual; and

- under 18 years of age or wholly dependent by reason of physical or mental infirmity, except where the claim is in respect of the individual’s parent or grandparent.

Pursuant to paragraph 251(2)(a) of the Act, for purposes of the Act, two persons are “related” to each other, if they are individuals connected by blood relationship, marriage or adoption. Paragraphs 11 to 22 of IT-513R contains more information on the equivalent-to-spouse tax credit. In your case, if at any time in 1998, you were a married person and you did not support or live with your spouse, and your spouse did not support you, you may be entitled to claim your child (who was wholly dependent for support on you) for the equivalent-to-spouse tax credit for 1998 if you maintained a self-contained domestic establishment in which you lived and you supported your child in that self-contained domestic establishment.

If you are unsure about your marital status on your 1998 income tax return and whether you are entitled to personal tax credits for the 1998 taxation year, you can contact your local taxation services office for assistance. All the facts and relevant documentation (for example, court order) should accompany your request.

We trust our comments will be of assistance to you.

Yours truly,

R. Albert, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

Encl:

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