Should Couple Living Apart for Health Reasons File Separate Returns?

par Andrew Rickard | April 23 2015 01:05PM

If spouses are required to live apart for health reasons, should they still file separate tax returns? The Canada Revenue Agency (CRA) says the answer depends on their intentions and not their circumstances.

photo_web_1316 In a technical interpretation released last week (20142014-0543311E5 E), the CRA was asked to consider the case of a legally married couple who are no longer able to live together because one spouse has advanced Alzheimer's and has been moved to a nursing home. The spouse with Alzheimer's no longer knows the name of the healthy spouse, and they are no longer able to socialize together or have an intimate relationship. Does this represent a breakdown of their marital relationship? Should they report their marital status as separated?

The CRA says that spouses who are living separately "for reasons other than a breakdown of their relationship" are not considered to be separated for the purposes of the Income Tax Act. For example, if one spouse were required to leave in order to attend school or find work, or if they were involuntarily separated (e.g., for medical reasons or incarceration), they would still file their taxes as a couple.

The technical interpretation points out that the courts consider a conjugal relationship to consist of several elements, such as shared shelter, sexual and personal behaviour, services, social activities, the societal perception of the couple, and economic support. These characteristics may be present in varying degrees and the courts do not require all of them to exist in order for a relationship to be found to be conjugal.

“As such, each characteristic is to be given its proper weight in the context of each particular case," concludes Pamela Burnley, an accountant with the CRA's Income Tax Rulings Directorate. "Therefore, whether two individuals are living separate and apart because of a breakdown of their marriage or common-law partnership can only be determined by the intentions and actions of the individuals involved.”