Filing Your Return -> Personal Income Tax -> Income Splitting -> Filing Tax Returns When You Have a Spouse
Filing Tax Returns When You Have a Spouse
Spousal tax returns are always filed separately - that is, the tax returns are prepared separately. However, when tax returns are prepared using personal income tax return software, most software will give the option of "coupling" the preparation of both returns. The returns are still printed and filed separately, but the software will usually highlight ways in which taxes may be reduced, and will automatically apply the spousal amount tax credit if eligible.
You are required to report what your marital status was as of December 31st of the tax year. This is done by ticking the appropriate box on page 1 of the tax return. The boxes include:
You are married or living common-law as long as you and your spouse are not living separate and apart from each other on December 31st because of a breakdown of the marriage or common-law relationship. If you are living apart from each other due to some other reason, including your spouse living in another country, you would still be considered married or living common-law.
You must report the name, social insurance number and net income (or the amount the net income would be if he/she filed a return) of your spouse or common-law partner on page 1 of your tax return. The spouse net income affects some tax credits, including the spousal amount tax credit.
The combined income of you and your spouse or common-law partner is used to calculate:- GST/HST credit
- Canada child benefit (CCB)
- Guaranteed Income Supplement (GIS)
- provincial low income tax reductions and some tax credits - see the information for your province
If one spouse is unemployed or has very low earnings, the other spouse can claim a spousal tax credit. See the tables of non-refundable personal tax credits for the federal and provincial territorial amounts of the spousal tax credit.
There are some tax credit amounts which can be combined and claimed on either spouse's return:
Some tax credits can be claimed by either spouse, or apportioned between spouses:- line 306 amount for infirm dependants age 18 or older
- line 365 children's fitness amount - not available 2017 and later years
- line 370 children's arts amount - not available 2017 and later years
- line 313 adoption expenses
- line 314 caregiver amount - 2016 and earlier years
- Canada caregiver credit - 2017 and later years
- line 423 family tax cut (FTC) - 2014/2015 only - can be claimed by either spouse, but not apportioned between spouses
The deduction (not tax credit) for child care expenses must generally be claimed on the tax return of the spouse with the lowest net income.
If one spouse (or common law partner) cannot use all of the following tax credits, they can be transferred to the other spouse by completing Schedule 2 of the tax return:- line 301 age amount
- line 323 tuition education and textbook amounts (these can also be transferred to a parent or grandparent
See also - links to all information on TaxTips.ca related to persons with disabilities.
Investment Income Earned in a Joint Account
When investments are held in a joint account, the investment income (including capital gains) should be reported based on the funds contributed to the account by each spouse. If the funds were provided equally by both spouses, then the investment income would be split equally. This subject is covered in the Canada Revenue Agency (CRA) web page Line 121 - Interest and other investment income, under the topic of Bank accounts.
In order for the lower income spouse to be able to claim more investment income, finances should be arranged so that the lower income spouse has money to invest.
Transfer of Canadian Dividend Income to a Spouse
In some circumstances, it is possible to transfer the income from taxable Canadian dividends to a spouse.
Other TaxTips.ca Resources:
Tax Tip: Try to arrange your finances so that both spouses have equal income before and after retirement.
Revised: March 12, 2018
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