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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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    High Performance Leaders Need Rest and Play

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  • It’s’ spring!

    With the change of season, it’s a great time to reflect on how you might want to adjust using your time and energy.

    How many of us have forgotten how to REST? How many of us have forgotten how to PLAY?

    I am guilty of not being aware of play or creating the rest I needed. I spent YEARS breathing way too fast, racing from task to task and event to event.

    I somehow believed that my worth was attached to what was accomplished. Leaving something undone was actually painful.

    Rest and play are not just important, they are critical.

    Researcher Stuart Brown says that the opposite of play isn’t actually work, it’s depression. Sadly, I know this all too well too.

    What happens to us when we don’t rest and play? Creativity suffers. Relationships suffer. Effectiveness suffers. Clarity and purpose suffer. Decision making ability suffers. Our overall capacity for resilience suffers.

    Can you relate?

    There is one simple metaphor that helps me choose when REST and PLAY are important: an elastic band.

    When we work so hard, give and parent, the elastic band is stretched with each new effort. Some elastics have far more “give” and can stretch great distances, much like each persons ability to work.
    Be careful to not let pride and ego take over here…. elastics have a breaking point. So do we.

    It’s impossible to know when an elastic has reached it’s breaking point. There are clues, but sometimes they surprise us.

    What clues are in your life? Are you paying attention to the clues? Have you already learned this lesson, but need to learn it again?

    Better than stretching an elastic to breaking point, is a the use of an elastic to stretch and release. Work and rest. Play.

    Referring back to the body of research by Dr. Stuart Brown, play is time spent without purpose; time spent when we can lose track of time and self consciousness.
    For me, that usually involves being in nature or in water…. and that is where I find hope, rest, creativity and a tonne of joy.

    Where do you feel like you lose track of time and self consciousness?

    That’s your zone.

    Find it and make sure you refuel.

    The purpose of an elastic is to stretch. For that it must contract.

    Work can be immensely satisfying. For that we must find rest.

    We cannot give something that we don’t have.

    What do you find restful? Where do you lose track of time?

    What resources do you have to employ a period of rest?

    Are your holidays restful and playful for you or are they a different form of work?

    Do you have any practices in place that allow you to shut off your phone?

    Give yourself what you need if you’re feeling stretched and ask yourself what is important. Get curious. Then breathe deep and make some choices.

    There may be hard choices at first. As you get better at playing and resting, you’ll become better at it.
    You’ll thank yourself.

    With more than 25 years serving communities throughout Saskatchewan and Alberta, Alana Peters has a heart for people who take responsibility for people and processes; leaders.   Her commitment is to equip leaders with skills and mindsets to improve their capacity and resilience with relevant and individualized coaching and training.

    Alana is a teacher, Certified Executive Coach, Certified Daring Way Facilitator and Certified Dare to Lead Facilitator.  She’s committed to making a difference in organizations and with individuals who want to make a difference!

    Click logo to visit website


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    Todayville Top 5 features five facts about favourite fooderie… Earls

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  • Todayville Top 5 is a sponsored segment produced by Jock Mackenzie (learn more about Jock below).   In this feature we learn (you guessed it) 5 things about some really cool aspects of Red Deer that make this city, our home.

    If our very first segment, Jock features a staple in Red Deer’s dining scene since it opened in … well let’s leave that up to Jock.  Welcome to the Todayville Top 5 with Jock Mackenzie.

    Todayville Top 5 Featuring Earls Restaurant

    1 Heritage

    Earls in Red Deer was the seventh-ever Earls in existence. Bill and Rhonda Olafson purchased the franchise and opened the current restaurant in 1984. Chef at the time, Andrew Lam, is still involved. Over the years, additions to the west and north have been added as has the covered, heated patio. The patio is unparalleled by other outdoor dining facilities for comfort and its Hawaii-like greenery. Today there are over 70 Earls restaurants across Canada and the United States. The founder, Leroy Earl “Bus” Fuller, brought A & W to Canada and is also the founder of the Fuller’s and Corkscrew restaurant chains. 

    2 Community Support

    Giving back to the community is a cornerstone of the Earls Red Deer philosophy. Those in need come first: rebuilding the youth camp at Camp Alexo, the Youth and Volunteer Centre, support for the Women’s Shelter at their annual gala, title sponsorship for the last six years at Rotary’s Black Tie Bingo, a 5-year ongoing plan to support the new Child Advocacy Centre, wine and wine service at the preview dinner for the Festival of Trees since the Festival’s inception . . . and many more.

    3 People

    With over 80 people on staff, Earls has provided employment for high school and college students over its 35 year history. The Earls philosophy, the practical skill set, and menu knowledge make up the intensive training each support staff and server undergo. Consistency is a hallmark. Numerous staff members have made life careers at Earls–and that’s one reason why you can count on a great meal every time. 

    4 Menu

    Fresh ingredients are key! The kitchen deals with “just in time” orders so that produce and proteins (delivered three times per week) come fresh to each table. The menu is becoming more and more inclusive–it meets an ever-increasing variety of dietary needs: numerous gluten free and plant-based options are available.             

    5 Interesting tidbits

    Beer? Earls brews its own Rhino beers (pale ale, lager and a seasonal beer) in Surrey, BC at Central City Brewery. There are also local products from Troubled Monk, Blindman and Snake Lake as well as a wide variety of domestic beer.

    Four Earls “Test Kitchen” chefs travel the world looking for new ingredients and dishes. A “Test Kitchen” in Vancouver will roll out a new dish and tailor it to an appropriate market in the 70 locations across North America–the furthest away is Miami. 

    Want to know more?  Click to go to https://earls.ca/locations/red-deer 

     

    Todayville Top 5 features the freelance writings of Jock Mackenzie.

    Jock is an original Red Deerian!  Educated at Lindsay Thurber and Red Deer College (with a stint at the U of A), he became an educator himself, spending 31 years with the Red Deer Public school system.

    It’s safe to say Jock knows Red Deer about as well as anyone (OK.. maybe not Michael Dawe).   As a confirmed life-long learner, Jock never tires of getting to know his surroundings even better.  That’s where the Todayville Top 5 comes in.  In each feature, Jock shares a few ingredients that go into the mix that makes this delicacy called Red Deer the place we want to call home.  As a well organized person who knows you’re busy, he’s choosing just 5 juicy tidbits to share each time.

    If you’d like to be featured by Jock Mackenzie on the Todayville Top 5, just contact us at info@todayville.com.

     


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