Common-law income tax filing
There are some tax perks for common-law couples in Canada so filing accurately can work in your favour.
Come tax time, a common question among young Canadians is whether or not to file jointly when living with a partner. Filing correctly can not only have tax benefits now, but will save you from a possible audit later.
There is often confusion over what exactly constitutes a common-law arrangement. In the eyes of CRA, if a couple has lived together for 12 straight months by December 31st, said couple will need to report their status as common-law when they file by the April 30th deadline. A common misconception, however, is that the couple must file together and on the same return. While this is the case in some U.S. states, it is not applicable in Canada. Canadians are considered individual taxpayers and may file as such regardless of their marital status.
There have been cases in which young couples don't wish to report common-law status, as combining incomes would result in both parties losing their quarterly GST rebate. When a couple is considered common-law, the government uses both parties' combined income to see if they qualify as a low income household. (Less than $34,000 net income.) Not reporting common-law status is illegal, and although it may result in the loss of this particular payoff, there are certain credits common-law couples are entitled to, including an extra credit on charitable donations, medical expenses, student credits, and more. Talk to a tax professional for more information.