Separated and CRA
Even if this information may never apply to you personally, becoming separated may happen to someone you know or care about, so please keep reading!
Canada Revenue Agency (CRA) only considers you separated after 90 days. It will only update its records after this time period; it’s a way of giving couples some time to reconsider without too much communication back and forth with CRA.
But once you are physically separated for 90 days, both individuals should be contacting CRA. Often the woman (and often a mother of dependent children) is the first to contact CRA because she knows it may increase her Canada Child Benefit and/or GST credit. CRA does back date these credits to the date of separation.
Note in the previous paragraph I used the word “physically” separated. In the past few years, I have spent time with separated spouses after they receive a request for information from CRA asking for proof of separation.
There have been times when they may be legally separated according to the lawyers. Legally separated is when the conjugal relationship ends; when you stop loving each other. But according the CRA, if you are still living in the same home, they do not consider you separated even if legally you are.
The only time you can both be under the same roof and be considered separated according to CRA is if the home has two distinct private entrances and two “separate” homes (self-contained with each having its own kitchen, laundry and bathroom, like a rental suite).
And even if you both are living in separate homes, you both need to be able to prove it.
This is where the problem starts.
For example, let’s say the woman stays in the family home and the man has left to stay somewhere else. As the woman (who often has a vested interest in CRA’s acknowledgement they have separated and increased Canada Child Benefits and GST Benefits and income tax savings), you need to be able to prove your previous spouse has left the family home and you are living separately.
So how do you do this?
It’s not good enough that both of you write a letter and both sign acknowledging you are living separately. He needs to provide copies of rent receipts, utility bills, bank statements, credit card bills, cell phone bills, driver’s licence, and auto insurance (the more the better and must include civic addresses to prove the physical location) to prove he’s living somewhere else and the mailing address is different. You make it harder for CRA to determine you are separated if you still use the same mailing address.
So once one partner moves out, make sure he/she has changed the address (mailing and civic) on everything. If you still get your spouse’s mail, you must return his or her mail to the sender. It’s more difficult now because most mail is electronic, so you may not know what organization may still have his or her old address.
I have seen instances where the husband moves in with a friend or family, but there are no bills in his name. He would need to get his name on the lease if they are renting. Plus change all the others (bank, auto insurance, etc).
Manitoba Public Insurance requires everyone update their civic address on their driver’s license within 30 days of moving.
As a last resort if there is really no proof that he has left the family home (or that he is physically living somewhere else), I have seen CRA accept third party confirmation letters. These are “professionals” CRA will accept letters from: daycare providers, school principals, family doctors (others can be accepted, again the more the better). I have provided such letters to families when I can attest they are living separate and apart. But you need at least three professionals who can attest to CRA about your physical separation.
So make sure that these professionals in your life are aware that the two of you have separated so they can have it documented (for if and when CRA asks for their letters). Make sure these professionals have separate physical (civic) and mailing addresses for each of you. Let them know where your previous spouse is living so they can change their records.
From a taxpayer’s point of view, I agree that CRA should be doing its job to make sure only those who qualify actually get the benefits they are entitled to receive. Unfortunately there have been families and individuals who have fraudulently receive benefits they were not entitled to. CRA is just protecting tax payer money.
I’m just trying to make sure you understand where CRA is coming from and that you (or someone you care about) ensure the physical separation is carefully documented so you stay on the good side of CRA. And keep all your December statements (maybe forever) for all your accounts; you never know if you might need them as proof of where you lived at the time.
Anni Markmann is a tax professional and owns Ste Anne Tax Service, working, living, and volunteering in our community. Contact Anni at 204-422-6631 or firstname.lastname@example.org or 36 Dawson Road in Ste Anne.