Income tax filing and common law partners

Q: My partner hasn’t filed his income tax for several years. Next year, I will have to declare him as my common-law spouse. He doesn’t owe any money, but I want to know how it will affect me personally if he isn’t up to date with his filings.

—T.V., Vancouver

A: As a common-law couple, you are “married” in many ways. But unless you went retro and added “obey” to your vows, you can’t make your spouse file his taxes, even though it is for his own good. In this case, however, your partner’s failure to file his returns can affect you too.

When you file your own taxes you will need to report his name, Social Insurance Number and net income. If your partner’s income is very low ($11,038 for the 2013 tax year), you may be able to claim the spousal credit on line 303 of your return. “If you claim that credit, the CRA will eventually want to verify that spouse’s income,” says Rosa Maria Iuliano, a Partner at Collins Barrow in Ottawa. “If your partner doesn’t file, they may reject your deduction.”

What’s more, if you are receiving benefits based on family income, like the Canada Child Tax Benefit, the CRA may not pay you until your tax filings are up to date. You may also miss out on tax savings like GST credits or property tax benefits. Medical expenses are usually claimed by the lower-income spouse and donations usually claimed by the higher-income spouse. If one spouse doesn’t file, you can’t take advantage of these opportunities and you could be paying more tax than you need to.

But the big risk to you personally is getting reassessed. Say your spouse finally gets around to filing because he’s expecting a refund, and it turns out he owes money. If this happens, says Iuliano, “the common law spouse gets reassessed because tax was filed based on numbers that turned out to be wrong. Then the reassessed spouse must repay the tax refund or credits claimed, plus interest, which is not deductible.”

I think you need to go back to your partner and ask again that he file, for your sake.

Bruce Sellery is a frequent guest on financial television shows and author of Moolala. Do you have your own personal question? Write to Bruce at [email protected].