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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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food and dining

One Eleven Grill shows off new renovations and some new menu creations

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One of Red Deer’s favourite restaurants has put some major effort into updating their space and creating some new menu items. One Eleven Grill opened its doors in 2011 with as a fresh and innovative entry into the local dining scene.

They’ve recently completed renovations and spent considerable time and effort developing some tasty new menu items. Watch the video above to get an idea of what you’re in store for next time you head down to one of the city’s finest restaurants.

About One Eleven Grill: An inviting and stylish restaurant tucked into the heart of Red Deer just waiting for you to discover or rediscover.

Opened on the first day of November in 2011, One Eleven has been thoughtfully and skillfully preparing delicious food and drinks for Central Alberta for years.

Our passion is STEAK! We are committed to quality, serving only the very best locally-owned, grass fed Alberta Triple AAA Beef in both classic and unique cuts.

Our warm, inviting ambiance is the perfect backdrop for everything from a romantic evening, a gathering with friends and family and even a quiet business lunch during the week. We even feature live jazz every Friday and Saturday. Add in one of the best selections of wine in the region, and One Eleven will set the perfect tone for your weekend.

At One Eleven we’re committed to your total satisfaction and we celebrate the people and food of Red Deer and Central Alberta every day.

For amazing food, great music and good times with family and friends, keep One Eleven in mind.

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Business News

Scott Subaru: Canada’s most environmentally friendly car dealership has opened in Red Deer

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You should visit Scott Subaru Passive House even if you’re not in the market for a new ride

From Scott Subaru: IT’S HAPPENED! 

We have moved into our new eco-friendly / energy efficient Passive House dealership and man are we happy! Although we are still in our ‘settling in’ process, we welcome you to come on down, have a nice hot beverage, and see just how big and beautiful this place is. We will be setting up a date for the Grand Opening once we have all our eggs in a cozy basket, so stay tuned for more information on that soon!
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The Scott Subaru Passive House is inspired by our partner, Subaru of Indiana, the automotive manufacturer that has achieved zero landfill status! Using an already positioned building, we strategically dismantled it piece by piece and saved everything we could for reuse and donation. For example, furniture donated, wires and cables salvaged to be recycled, and windows saved for re-use else where. This is an incredibly energy efficient dealership that is estimated to cost less than $200/year to heat and cool!

Outside we have permeable pavement for the landscaping. This eco-friendly, sustainable pavement helps reduce storm water run off, protecting it from solids and pollutants that travel to drainage facilities, and naturally filters the storm water turning it to ground water. Engineered to keep the building pristine while minimizing our energy use and environmental impact. ??♻️
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Massive thanks to everyone who was involved in this project! Black Creek Developments Inc., Sublime Design Studio Inc., Peel Passive House, 908 Engineering, Lex 3 Engineering, Sable Electrical Services, Cover Architecture, Heron’s Nest Landscaping, and many more…!!
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Our new location address is 6863 50 Avenue, Red Deer AB. 

Learn more about Passive House here… 
https://www.scottsubaru.com/passive-house

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july, 2019

thu18jul(jul 18)12:00 pmmon29(jul 29)8:00 pmTaste of Edmonton12:00 pm - 8:00 pm (29)

sun21jul11:00 am2:00 pmOne Eleven Jazzy Brunch11:00 am - 2:00 pm

fri26jul6:00 pm9:00 pmTaste of Red DeerSummer Just Got More Delicious!6:00 pm - 9:00 pm

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