By Gwyneth James MBA CPA CGA, Senior Partner Cody & James CPAs
A change in marital status can have a huge impact on your taxes and on other benefits you receive. If you neglect to inform the government of a change, there may be back-dated adjustments that you weren’t expecting.
In the excitement of a new relationship or the pain of a dissolving one, it is easy to forget that you must let CRA (Canada Revenue Agency) and Service Canada know about the change. The form to complete is RC65 and it should be sent in shortly after your status changes. Don’t wait until you file your tax return; benefits you are receiving can be affected by the combined income of you and your partner and may end up being clawed back. These include Child Tax Benefit, GIS, GST, or the Ontario Trillium Benefit.
If you get married the date of change is easy to identify, but what about Common-Law? For tax purposes, a Common-Law Partner is someone who you have lived with for 12 consecutive months in a conjugal relationship (you sleep together). Gender is irrelevant, of course. So you would file the RC65 after a year. Note that the one year waiting period may disappear if there are children involved.
If you are separated from your partner due to a breakdown in the relationship for more than 90 days and you haven’t reconciled, your marital status has changed. File the RC65 with the effective date as the date you started living apart (or not sleeping together).
Another form often forgotten is the TD1 that you complete with your employer. It should also be reviewed when your marital status changes because some tax credits you received as a single person can either be lost or can now be shared when you are a couple and vice versa.
Don’t wait to advise CRA about your change in marital status; it may have an unexpected financial impact on you.