Separation and CRA
This subject may not apply to you, but I hope you will continue to read on. Just by knowing a bit about how Canada Revenue Agency treats those who were married or common-law and separate you may be able to help someone you care about in the future; maybe a child or grandchild or another family member or a friend.
First of all, CRA only considers you separated after 90 days. 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 Child Tax Benefit and/or GST credit.
Note in the previous paragraph I used the word “physically” separated. In the past few years, I have spent time with separated women (they often have more to gain financially by contacting CRA) after they receive a request for information from CRA.
There have been times when they may be legally separated according to the lawyers (and this date is used in the legal separation agreement (this is when the conjugal relationship ends). But according the CRA, if you are still living in the same home, they do not consider you separated.
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 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 again often has a vested interest in CRA’s acknowledgement they have separated and increased Child Tax Benefits and GST Benefits), you need to be able to prove he 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. Return his or her mail to the sender if you have to.
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)
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 request third party confirmation letters. These are “professionals” CRA will accept letters from: daycare providers, principals, family doctors (others can be accepted, again the more the better).
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.
From a taxpayer’s point of view, CRA should be doing its job to make sure only those who qualify actually get the benefits they are expected to receive. Unfortunately in the past 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 separation is carefully documented so you stay on the good side of CRA. And keep all your December statements (maybe forever); 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.