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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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Red Deer’s Newest Hotel perfect for extended stays!

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When Red Deer based ZH Holdings decided to expand, they opted for a different look and feel from their portfolio of Holiday Inn properties.  The company that oversees the Holiday Inn brand had another ZS Holdings thought would make a perfect fit for Red Deer.  It’s called Staybridge Suites.

At Staybridge Suites, the rooms are perfect for people staying several nights.  All rooms have fully equipped kitchens, so you can prepare your own meals with a stove, microwave, refrigerator, and dishwasher.  The suites all have large workspaces with complimentary high-speed internet, and a 24-hour business centre to help you stay at your best.  On top of that, each suite is designed with a separate seating area so it feels just a little bit more like home.  Staybridge also offers apartment-style suites with separate sleeping and living rooms, ideal for families and groups.

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Staybridge Suites is absolutely loaded with amenities, like storage lockers, free laundry facilities, a 24-hour fitness centre, and a 24-hour convenience store loaded with easy-to-prepare meals, snacks, and anything you may have left at home.  Of course at home you probably don’t have an indoor pool, hot tub and waterslide.  You probably also don’t have a full breakfast buffet every morning.  Staybridge does.  Red Deer’s new Staybridge Suites is more than just a hotel—it’s somewhere you can feel at home.

It’s also brand new.  Please take a minute to watch some highlights of our recent grand opening ceremony, featuring Alberta Premier Jason Kenney!

And enjoy this fun little video which really captures the spirit of Staybridge.

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Alberta

Homes by 3Leafs showcases the first single family, shipping container home built in Calgary.

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Homes by 3Leafs showcases the first single family, shipping container home built in Calgary. The Alberta based company is changing how homes are constructed by transforming recycled steel containers into high performance, energy efficient homes with net zero capabilities.

September 19, 2019, Calgary, AB ​Homes by 3Leafs gave media an exclusive inside look into the sleek, elegant modern two-storey home made from four recycled shipping containers. The home is nestled in the eco-friendly community, Echohaven, in northwest Calgary.

Som Sourachit, C.E.O. of Homes by 3Leafs describes this moment as pivotal. “Our high performance, energy efficient houses reduce waste in landfills by repurposing steel shipping containers into dream homes. The houses have net zero capabilities and are the new blueprint for how we should build while protecting our environment. “

It’s estimated there are millions of shipping containers piling up in landfills worldwide. The repurposed containers make the perfect envelope for a home, and reduce the heavy reliance on trees used for construction. The steel means shipping container homes are sturdier and will last for generations with fewer repairs than traditional stick builds over time.

The homeowner, Jaime Turner, added “This is a teaching moment for my young daughter. We wanted to build a legacy for her. This is our forever home and we know because it’s made of steel it will last for generations, and an added bonus is, we are being good to our environment!”

Homes by 3Leafs is proud to be leading the way in new home construction. Currently, 6 building projects are underway.

About Homes by 3Leafs

Homes by 3Leafs is a global company based in Edmonton and is comprised of a team of architects, construction experts, designers, and engineers with years of experience developing stunning homes. By using shipping containers to build, Homes by 3Leafs is committed to saving the environment. Thousands of containers pile up in landfills unused while forests can’t be cut down fast enough to support the robust construction industry. The company leads the way with cutting edge technology and new innovations to help the world build beautiful sustainable homes to last hundreds of years.

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october, 2019

wed16oct6:00 pm11:00 pmBusiness of the Year Awards - Red Deer Chamber of Commerce6:00 pm - 11:00 pm Red Deer College

thu17oct6:30 pm8:30 pmACRYLIC POUR ART CLASSES6:30 pm - 8:30 pm

fri18oct7:00 pmLip Sync Battle7:00 pm MT Bo's Bar & Grill, 2310 50 Ave Event Organized By: The Outreach Centre

sat19oct9:00 am4:00 pmCoats 4 Kids & Charity Checkstop9:00 am - 4:00 pm Taylor Drive Event Organized By: The Central Alberta Crime Prevention Page

sat19oct10:00 am12:00 pmRed Deer River Naturalists Bird Focus Group Walk10:00 am - 12:00 pm MST Kerry Wood Nature Centre, 6300 45 Ave Event Organized By: Red Deer River Naturalists

sat26oct10:00 am12:00 pmRed Deer River Naturalists Bird Focus Group Walk10:00 am - 12:00 pm MST Maskepetoon Park Event Organized By: Red Deer River Naturalists

tue29oct(oct 29)1:00 amsun03nov(nov 3)1:00 amCanadian Finals Rodeo1:00 am - (november 3) 1:00 am Westerner Park, 4847A-19 Street

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