Local Business
Are You Considered Common-Law For Canadian Tax Purposes?
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.
The Downtown Business Association (DBA) Board of Directors has made the decision to wind down the Association’s operations at the end of 2025.
The Board determined that the Association is no longer able to operate sustainably under the financial framework available for 2026. After exploring all reasonable alternatives, the Board concluded that it could not continue without reducing services to a level that would no longer provide meaningful value to levy-paying businesses.
The DBA does not receive any operating funding from City Hall in a regular year, all funds raised are through Business Improvement Area Levy that consists of a mandatory levy placed on all businesses operating within the Business Improvement Area. These funds are legislated under the Municipal
Government Act, to be used to promote the Business Improvement Area, which is achieved through marketing and event initiatives along with providing advocacy support primarily to local government on behalf of the business community.
In recent years, the DBA has been a committed advocate for re-examining the approach to Downtown Governance. The Board has consistently maintained that the responsibility for funding downtown initiatives in such a socially charged environment should not rest solely with the business community.
Despite their efforts, the DBA recognized that the funds generated through the Business Improvement Area Levy were insufficient to effectively address the growing challenges of the current operating environment. This ongoing financial strain highlighted the need for a more equitable and sustainable
model to re-establish the downtown as a safe and welcoming heart of the city.
At the annual DBA budget presentation to City Hall, the DBA requested the essential funding needed to implement the Greater Downtown Governance Committee’s recommendations — work that the DBA is uniquely positioned to lead and has been delivering despite depleting resources for many years. The request was not approved. Instead, The City offered a one-time $100,000 Grant-in-Lieu, paired with a proposed 60% increase to the Business Improvement Area levy in 2026.
After careful analysis, the Board concluded that increasing the levy would place undue strain on already challenged businesses and compromise the DBA’s role as a trusted advocate. Operating with the reduced funding of $225,000 would require further staff reductions in an already under resourced environment and a significant reduction in programs, making it impossible to deliver the level of support that downtown businesses deserve and vitally need.
Beginning January 1, 2026, the City of Red Deer will become the primary contact point for matters previously supported by the DBA, including downtown support programs, business-district coordination, events, safety and cleanliness support, and stakeholder engagement. The DBA will work with City staff to support a smooth transition.
The DBA will continue to provide Clean Team services through the delivery of the City-funded environmental contract until February 1st, 2026.
Quote from CEO, Amanda Gould:
“To our business community, we have always operated with your best interests in our heart, continually driving the vision of a thriving downtown environment that serves every member of our community. The changes ahead will have a significant impact on downtown, as there will no longer be an organization dedicated to ensuring the downtown remains top-of-mind, leading events, marketing initiatives, or advocating on your behalf. It is likely you will experience less coordinated support and collective representation.
After 13 years of service to you and our beautiful downtown, it is with great personal sadness that we find ourselves here, but our message remains clear – addressing the unique challenges of our downtown should not rest solely on your shoulders. We cannot, in good faith, collect a levy that does not enable us to provide the essential services needed for our evolving downtown landscape”.
Quote from DBA Board Chair, Brandon Bouchard:
“The incredible staff at the Downtown Business Association have consistently delivered on their mandate with outstanding dedication and effectiveness. Through their efforts, they have successfully promoted the downtown area, organized impactful marketing and event initiatives, and provided steadfast
advocacy support for the business community. Their work has extended well beyond the legislated requirements, as they have proactively responded to the evolving needs of downtown businesses, adapting to challenges and supporting operations within a complex and changing environment.
Despite the staff’s relentless commitment to positioning the DBA as an effective leader for downtown interests, the absence of a sustainable funding model has made it impossible to continue delivering meaningful support. The Board cannot, in good conscience, propose a levy that does not enable the
Association to meet the required level of service, address the shifting priorities of the business community, or respond to the continually evolving needs of the downtown”.
From Community Futures Central Alberta
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