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Are You Considered Common-Law For Canadian Tax Purposes?

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  • By: Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr – President & Founder of CGL Strategic Business & Tax Advisors

    This time of year many couples come to us asking “should we choose to file single or common-law?”

    Unfortunately, in Canada, it is not a choice… no matter what your friend said.

    The Canadian system looks at household income to determine your eligibility for tax credits and benefits like the GST Credit, the Canada Child Benefit, and various types of social assistance programs.

    First the boring stuff:

    You can find the legal definition of “common-law partner” in Subsection 248(1) of the Income Tax Act, but in layman terms. They can be simplified into:

    Have you lived together for more than a year in a “conjugal relationship” (more on that later) in which you were not separated (ie: a break up) for more than 90 consecutive days during that period, or
    Have you lived together for one day and you are both a parent of the same child?
    Now my colleagues will point out some rare exceptions to the above, but for most of you reading that’s as simple as it gets.

    I must also point out that the definition of “common-law” for provincial marital or interdependent property laws is different from the definition for income tax purposes and can vary by province. Usually, the income tax definition is a shorter time test.

    “OK, But what does “conjugal relationship” mean?”
    If you are a boring tax nerd like myself, you would understand that the only difference between marriage and common-law on a tax return is that common-law is in a conjugal relationship.

    (insert laugh track here)

    For the rest of you that don’t see the humour, the courts have actually come up with a series of tests to consider on whether or not a conjugal relationship exists.

    The Tax Court of Canada in Hendricken v The Queen, 2008 TCC 48 referenced a different court’s 1980 ruling… (yes, I know… a ruling before the first space shuttle took flight… before Diana Spencer married Prince Charles… and before the first female justice was appointed to the US Supreme Court)

    … but the ruling in 1980 was for a different purpose, but has been expanded and clarified over the year, and Hendricken [2008] stated that it should apply similarly when it comes to the Income Tax Act common-law requirement of “conjugal relationship”.

    As such, there are 7 areas of consideration for a definition of “conjugal relationship”.
    Basically, it is a combination of factors that must be viewed as a whole. It isn’t a black and white test, nor is it a simple yes/no. You have to weigh each one and then look at the whole picture to see if it is more likely or not that you were in a “conjugal relationship”

    So here are the things to consider to figure out if you are in a common-law partnership for tax purposes as according to the Canadian courts:

    1) Shelter

    – Did the parties live under the same roof?
    – What were the sleeping arrangements?
    – Did anyone else occupy or share the available accommodation?

    2. Sexual and Personal Behaviour
    – Did the parties have sexual relations? If not, why not?
    – Did they maintain an attitude of fidelity to each other?
    – What were their feelings toward each other?
    – Did they communicate on a personal level?
    – Did they eat their meals [together?] – What, if anything, did they do to assist each other with problems or during illness?
    – Did they buy gifts for each other on special occasions?

    3. Services
    What was the conduct and habit of the parties in relation to:
    – preparation of meals
    – washing and mending clothes;
    – shopping
    – household maintenance; and
    – any other domestic services?

    4. Social
    – Did they participate together or separately in neighbourhood and community activities?
    – What was the relationship and conduct of each of them toward members of their respective families and how did such families behave towards the parties?

    5. Societal
    – What was the attitude and conduct of the community toward each of them and as a couple?

    6. Support (economic)
    – What were the financial arrangements between the parties regarding the provision of or contribution toward the necessaries of life (food, clothing, shelter, recreation, etc.)?
    – What were the arrangements concerning the acquisition and ownership of property?
    – Was there any special financial arrangement between them which both agreed would be determinant of their overall relationship?

    7. Children
    – What was the attitude and conduct of the parties concerning the children?

    As you can see, there are many different things to consider.

    Also, you must remember, that it this isn’t a criminal proceeding so the government does not have to prove beyond a reasonable doubt, and they also don’t have to assume your innocence.

    As a result, whichever filing position you are trying to prove, common-law or single, and you are not sure as to which you might be, document as many answers to the questions above as you can while they are fresh in your mind, rather than trying to remember in two years when the CRA does the audit.


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    Green Energy Futures talks to Scott Subaru about the new eco-friendly dealership.

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  • “FIRST PASSIVE HOUSE CAR DEALERSHIP IN CANADA”

    Interview conducted & produced by David Dodge, Subaru of America in production with Green Energy Futures.
    – Original blog post with video at >> http://www.greenenergyfutures.ca Episode #213

    _____________________________________________________________________

    – We’ve seen some amazing super energy efficient buildings on Green Energy Futures, including living buildings and net-zero churches, homes and even department stores. But we’ve never heard of anyone doing what the Scott Subaru car dealership in Red Deer is doing.

    Garrett Scott: “Hi, I’m Garrett Scott, I’m the dealer principal of Scott Subaru in Red Deer and we have almost completed our construction of the World’s first Passive House car dealership.”

    – Scott said they were inspired to do something special when they visited the Subaru plant in Indiana.

    Scott: “Subaru America has a zero waste plant and the plant is also sitting on a wildlife nature preserve as well. They’ve got incredible kind of wetland and green space around it and the zero waste is pretty unique when you consider manufacturing; you’re always wasting a little bit, you would think.”

    – Inspired by the zero waste idea, Scott came back to Red Deer and talked to Cover Architects and came up with the idea of building the first car dealership built to the Passive House standard.

    Scott: “We wanted to be able to have the ultimate calling card and have something that was so unique but also represent some of our values. Why waste if we don’t have to? Why build something that is just ‘Ho Hum’, that everyone else has done before and if you’re going to be in one spot for 50 years or want to be here for 50 years more; let’s build a legacy project that means something today as much as it would 20 years from now.”

    – There are many reasons why they undertook the project.

    Scott: “We’re talking about eliminating 80% of our heating and cooling costs almost and that’s the reason we did it. That’s cool. That’s really quite exciting.”

    – But it’s about more than saving money.

    Scott: “Being as efficient as it is from an energy standpoint motivates us to take our business and follow a similar trend we try and make the most efficient process for our customers from a purchase standpoint, from a repair standpoint, but also then correlate that into our staff; Passive House buildings are considered much more livable and much more enjoyable than your standard commercial building is.”

    – So how do you take a car showroom with floor-to-ceiling windows to Passive House standards?

    Scott: “So, Passive House is essentially an unbreakable blanket around the building that keeps it insulated from the environment outside and that goes with the walls, the windows, the doors, and also the foundation, the flooring. You build exterior walls that are getting close to 20-22 inches thick; you’ve got four layers of different types of insulation, types of material, impenetrable barriers.

    – All of this adds up to a car dealership that uses 80% less energy and doesn’t have a conventional furnace.

    Scott: “There is heat recovery units and then super efficient air-source heat pumps and these air source heat pumps, they can be 200% more efficient than a furnace and with that you get those incredibly low consumption numbers, and they’re rated now to be available in Alberta for temperatures down to -30. We’re very confident that this will get done but the big issue with this building isn’t necessarily heating it, the envelope is keeping the heat in, it’s cooling it and these heat pumps also work in the inverse fashion and they cool the building too.”

    – Garrett’s grandfather Kipp Scott opened the family’s first car dealership in Red Deer 50 years ago. Garrett says this is a legacy project that he hopes will still be cool 20 years from now.

    Scott: “This building will also garner some more exposure than a traditional new dealership would and that’s also one of the big motivators in doing this is to achieve the goals we have as a Subaru dealer. We need to be extremely unique. This helps us get there.

    ______________________________________________________________

    Learn more at GreenEnergyFutures.ca – and – www.ScottSubaru.com/Passive-House


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    Local Business

    Why Coaching? It’s Better than Chocolate Cake.

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  • I am a coach. I love what I do. A lot of people have good questions about my work.

    One question that gets asked repeatedly is, “What is coaching?”

    The best answer to “What is coaching?” is always to experience coaching. It’s like trying to describe chocolate cake.

    You can try to describe chocolate cake or you can eat chocolate cake. There’s a big difference.

    According to the International Coaches Federation, the governing and regulatory body for certified coaches, “Professional coaching brings many wonderful benefits: fresh perspectives on personal challenges, enhanced decision-making skills, greater interpersonal effectiveness, and increased confidence. And, the list does not end there. Those who undertake coaching also can expect appreciable improvement in productivity, satisfaction with life and work, and the attainment of relevant goals.”

    Wow, right?

    Another way of looking at the question “What is coaching?” is to hear what clients experience in a coaching conversation. It’s sort of like asking what it feels like to eat chocolate cake.

    Here are some candid responses from my clients.

    Coaching feels like…..

    Clarity and direction

    Encouragement with action

    Finding my bravest self

    Focused empowering

    Hard Work

    Challenging

    Enlightening

    Informative

    Momentum with hope

    Safe

    Impending Change

    Hopeful Moving Forward

    Reorganizing of thoughts

    Action Focused

    Uncomfortable in a good way

    Exciting

    Clear Direction

    Vulnerability, Ownership, Clarity

    I CAN CHANGE!

    If you are looking for any of those results this year and you’re tired of the same struggles year after year, hiring a coach may be a great option for you. I know it has changed my life and I am honoured to offer my clients a conversation that can do so much!

    One word of caution… chocolate cake with all of the best, specialized ingredients, that is masterfully put together by an experienced chef is going to be a very different experience than eating cake that was baked by someone with less understanding of the ingredients. Find a coach with training and experience that supports the outcomes and experience you are looking for.

    So, instead of just asking, “What is coaching?”, try it!  You’ll be glad you did.  It’s better than chocolate cake.


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    january, 2019

    mon14jan - 31jan 1410:00 amjan 31Kindergarten Registration Begins at Red Deer Public SchoolsRegister your child for Kindergarten10:00 am - 3:00 pm (31)

    thu17jan - 26jan 177:30 pmjan 26Ignition Theatre Presents: GRUESOME PLAYGROUND INJURIESPulitzer prize finalist Rajiv Joseph’s Gruesome Playground Injuries7:30 pm - 11:00 pm (26)

    wed23jan12:30 pm- 1:00 pmBusiness Professionals Video Lecture LunchThis course explains high-level business concepts in simple ways. 12:30 pm - 1:00 pm

    sat26jan9:00 am- 5:00 pmChildhood Anxiety: Understanding & Helping Children Heal Workshop9:00 am - 5:00 pm

    sat26jan1:00 pm- 4:00 pmMAGSaturday @ the MuseumMAGnificent Saturdays welcomes all ages and abilities to participate in a fun art project every week! 1:00 pm - 4:00 pm

    sat26jan8:00 pm- 10:30 pmRobbie Burns Night8:00 pm - 10:30 pm

    mon28jan11:30 am- 1:30 pmLending Cupboard Presents Jann Arden in 1st annual Winter LuncheonJann Arden \"Winter Luncheon\"11:30 am - 1:30 pm

    tue29jan5:00 pm- 7:00 pmRed Deer and District Chamber of Commerce presents: January Business After Hoursnetworking event 5:00 pm - 7:00 pm

    tue29jan7:00 pm- 12:00 amPaul BrandtThe Journey Tour 20197:00 pm - 12:00 am

    tue29jan7:00 pm- 11:30 pmLive Country Music @ Bo's Bar and GrillAaron Pritchett w/ Guest Kira Isabella and David James7:00 pm - 11:30 pm

    wed30jan12:30 pm- 1:00 pmBusiness Professionals Video Lecture LunchThis course explains high-level business concepts in simple ways. 12:30 pm - 1:00 pm

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