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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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    Business News

    All Chamber members invited to 125 Anniversary Open House this Friday!

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  • Chamber celebrates 125th anniversary

    On March 17th the Red Deer & District Chamber of Commerce will celebrate its 125th anniversary.

    In 1894 the Red Deer Board of Trade was established and set its first goal to establish a municipal government for the area.  By 1901 Red Deer was incorporated as a town.  As time went on the Board of Trade become more heavily involved in improving Red Deer’s position and eventually became involved in national issues.  By 1953 the Board of Trade had experienced such growth that a decision was made to officially change its name to the Red Deer Chamber of Commerce.

    The Chamber plans to spend a good part of 2019 promoting their roots in the community and historical significance at their events and through marketing efforts.  “We have several things planned this year that tie in to our 125 year anniversary.  Including our 125 year brand that is a replicating the original Welcome to Red Deer sign from the 1960s.  The Chamber has been a pillar in the community and instrumental in helping shape Red Deer into the vibrant city it is today” says Rick More, CEO, Red Deer & District Chamber of Commerce.

    The Chamber invites their members to join them on March 15th from 2-4pm at their open house to kick off the celebrations.  Members and the public can watch for their communications throughout the year and can follow them on social media through their Facebook: www.fb.com/RedDeerChamber and Twitter: @reddeerchamber

    The Red Deer & District Chamber of Commerce is a collaborative leader in building a globally significant region and a vibrant community.


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    Entertainment

    Great Slate of Guests Coming to the Red Deer Home Show!

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  • The Red Deer Home Show is back once again for 2019!

    Over 280 vendors will be on hand to provide Central Albertans with new products and services, ideas and décor in Canada’s hottest economic region!

    Be sure to also check out a few of this year’s excellent speakers and celebrities- they’ll be talking everything from gardening, to home organization to senior living!

    Here are your 2019 speakers and when they’ll be taking the stage:

    Donna Balzer- One of Western Canada’s Top Gardeners

    Garden expert, regular guest on CBC radio in Alberta and host of internationally aired Bugs & Blooms on HGTV.

    Donna brings garden inspiration and practical insider information to get you growing your own vegetables this season.

    You will learn: The basics of garden design, selecting plants and choosing containers that are right for you plus the secret to growing pest-free food. Learn tips and tricks to grow great vegetables in 2019.

    Saturday, March 16 at 2:30pm

    Sunday, March 17 at 11:30am

    Learn more about Donna here: www.donnabalzer.com

     

     

     

    Chelsie Anderson- Garden Gratitude Throughout the Seasons

    Regular CBC Radio “The Home Stretch” contributor, Chelsie understands gardens from a lifetime of hands-on experience. She has been the owner and operator of her gardening business “Garden SOIL-utions” for over a decade where she passionately tends to existing gardens and installs new ones with inspiration. In addition to her CBC appearances, Chelsie is frequently in the media; on CTV News, Global News, and gets many a mention in the Calgary Herald. She also sells red wiggler worms and their poop, known as castings, to gardeners who love the soil as much as she does. Beautiful plants start from the ground up!

    Sunday, March 17 at 1:30pm

    Learn more about Chelsie here: www.chelsiesgardens.com

     

    Terry Hollman- Organizing Your Home

    As President of the Red Deer based company, Canadian Closet, Terry knows a little bit about helping Central Albertans get organized and de-cluttered. When setting New Year’s resolutions, getting organized is in the top 10 and is often a repeated goal throughout the year. Terry will provide advice, solutions and visuals during this presentation to explain the best solutions for organizing areas in the home.

    Attendees will be motivated to tackle closets, kitchens, pantries, garages, and more with practical, functional, and sensible ideas for keeping the home organized.

    Saturday, March 16 at 11:30am

    Carol Kelly- Healthy Yards

    Healthy yards mean healthy for you as landowner, your community and local wildlife. This casual presentation will introduce you to Medicine River Wildlife Centre, learn how they can help you and how you can take simple steps to mitigate any conflicts or injuries concerning wildlife in your yard.

    There will also be time to visit with Fang, the Centre’s education skunk, and ask any questions you may have.

    Sunday, March 17 at 2:30pm

    The BILD Team- Thinking about Buying a New Home or Renovating your home? Questions to ask before you hire your next contractor?

    Need to hire a home builder to build your new home or a contractor for your next renovation project?  Interviewed by Lisa Buckingham, from questions provided by the audience, Derek Fredeen, Andrew Wiebe and Kevin Wilkie will offer tips for selecting and working with a qualified professional before you start your search. This is a Q&A panel discussion so bring your questions, pens and paper.

     

    Saturday, March 16 at 3:45 pm. 

    Audience members will receive a free home show admission ticket to return on Sunday. With information provided by the panel, we only thought it fair to give you the chance to return on Sunday armed and ready to ask more questions to the trades participating in the show. Sponsored by BILD – Central Alberta

    Ellen Walker- How to Alleviate Stress and Make Your Home Work for You

    Ellen will go through some steps in the interior design process so that your home reflects you, and how a professional Interior Designer can achieve your vision while reducing the stress on you.

    Saturday, March 16 at 1:00pm

     

     

     

     

    Sue West, Isabelle Setter and Karen Patzer- Senior Living By Design

    Join Sue,  Isabelle, and Karen, from Timberstone Mews, Christenson Developments,  in a presentation and discussion on senior “Lifestyle Innovations & Resident-Centred Services”.

    Friday, March 15 at 6:00pm

     

     

     

     

    The 2019 Red Deer Home Show

    Dates and Times:
    Friday, March 15 – noon to 8:00pm
    Saturday, March 16 – 10:00am – 6:00pm
    Sunday, March 17 – 10:00am – 5:00pm


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    march, 2019

    fri8mar - 30aprmar 85:30 pmapr 30Real Estate Dinner Theatre5:30 pm - (april 30) 10:00 pm

    sat30mar - 31mar 3010:00 ammar 319th Annual Central Alberta Family Expo10:00 am - 5:00 pm (31)

    sat30mar1:00 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

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