During and following a divorce, your tax situation changes significantly. Here are a few of our most commonly asked “Divorce and Canada Revenue Agency” questions:
When does Revenue Canada consider you separated?
Separated for family law purposes is different than separated for Canada Revenue Agency (“CRA”) purposes. For family law, you are separated when you officially tell your spouse of your intention to separate, but in this you can still reside in the same home.
For CRA purposes, you are not considered as separated while living under the same roof and they will only consider you separated when you live separate and apart from your spouse or common‑law partner for a period of 90 days or more due to a breakdown in your relationship. A separation of less than 90 days is not considered a separation for the purpose of Child and Family Benefits. Once you have been separated for 90 days, the effective CRA day of your separated status is the day you started living under different roofs.
Can we live in the same house and be considered “separated” for tax credits?
Even though it may be legally possible to be separated and still live in the same house CRA will not consider a separation to have occurred if you continue to live together in the same household. If you reside in the same household and continue to share parenting and financial responsibilities, CRA will not consider a separation to have occurred for the purpose of administering the Canada Child Benefit (“CCB”) or Goods and Services Tax/Harmonized Sales Tax (“GST/HST”) credit legislation.
What do I have to do if my marital status has changed?
If your marital status changes, you must let Canada Revenue Agency know, as this may affect the amount of CCB and/or GST/HST credit to which you are entitled. If you have registered with their “My Account” service, you can view the marital information CRA has on file for you and you can change your information online. If you are not registered online, inform CRA of your new status and the date of the change in a letter or by completing form RC65, Marital Status Change.
Canada Child Benefit:
The Canada Child Benefit program is non-taxable and income-dependent. It provides a maximum of $6,400 per year for each child under six and $5,400 per year for children aged 6 to 17. The benefits begin to reduce when the adjusted family net income is over $30,000. Parents who primarily care for their children and have a qualified dependent are able to claim the benefit. In situations where you share guardianship of your children, both parents may qualify and the benefit can be divided. If you or your new spouse or common-law partner have children who are residing with you, CRA will move all the children to the female parent’s account. If you are married or living common-law with a person of the same-sex, one of you will receive the CCB for all the children. To continue receiving the CCB, you and your spouse or common-law partner have to file a tax return every year, even if you have no income to report.
If you did not apply for the GST/HST credit on your tax return and your status is now separated, widowed, or divorced, you can apply now by writing a letter to your tax centre. Once they review your request, they will send you a GST/HST credit notice advising you of the amount of your GST/HST credit.
Working Income Tax Benefit (WITB) Advance Payments:
If your marital status has changed, you will need to file a new Working Income Tax Benefit (WITB) Advance Payment application. If you do not file a new WITB Advance Payment application, your WITB advance payments will be stopped until a new application is received. The application deadline date is August 31
If you receive your benefits by Direct Deposit, please inform CRA if your information needs to be modified. This is to prevent benefits from being deposited into the wrong bank account. If you are not on Direct Deposit, you may want to consider registering.
What Happens to my Eligible Dependent Credit?
In order to be eligible for the Eligible Dependent Credit you must:
- Live with a child under the age of 18 for most of the year,
- not be making any support payments for the child, and
- no one else can claim credit for that child.
In situations where you are the primary caregiver who is receiving child support, you will claim the Eligible Dependent Credit. If your spouse is the primary caregiver, your spouse will claim the Eligible Dependent Credit. If you and your spouse are sharing the caregiving and not making support payments as a result, you may wish that each of you claim the credit in alternate years.