Spouse or Common-Law Partner

If you are married or in a common-law relationship, you may be able to claim a spousal tax credit for federal purposes. For example, in 2023, you could claim a spousal tax credit if your spouse earned less than $15,000.

How is the spousal tax credit calculated?

Using the 2023 example above, the spousal tax credit is calculated by subtracting your partner’s net income from $15,000 and multiplying the remainder by 15%, which works out to a maximum of $2,250 ($15,000 x 15%).

If your spouse earned $5,000, this would mean you would be eligible for tax savings of $1,500.

Does sexual orientation matter?

No. A few years back, the federal government extended the concept of a spouse to include same-sex couples living together.

What is the definition of common-law?

Two individuals living together are in a common-law relationship if they have cohabitated continuously for at least one year or have a child together.

Spouse or Common-Law Partner’s Unused Tax Credits

Can I claim my spouse or common-law partner’s unused tax credits?

If your spouse makes $14,398 or less per year in net income, you may be able to use some of their tax credits when completing your tax return. The tax savings could be substantial. This $14,398 amount only applies to 2022 and is increased for inflation each year.

There is a section (Schedule 2) on your income tax return, which outlines the tax credits that may be transferred from your partner to you. Some of the possibilities include:

  • age amount
  • disability amount
  • tuition amount
  • pension income amount

To determine the amount of the federal income tax credit, the gross tax credits are subject to a 15% rate and this amount is available to reduce federal income taxes.

Don’t forget about provincial credits

The examples listed previously are some examples of federal non-refundable tax credits. There may also be further provincial credits available to help increase your tax savings.

Eligible Dependents

Are you supporting a child or dependent relative?

If so, you may be able to claim an amount for an eligible dependent if you were also either unmarried or separated from your spouse or common-law partner in the year.

What is an eligible dependent?

Typically, this is someone who:

  • is related to you
  • lives with you
  • is completely dependent on you or others in your household for support
  • is under 18 years of age

An eligible dependent can also be a child, parent or grandparent who is dependent on you due to a mental or physical impairment.

How much can I claim?

The maximum amount that can be claimed is 15% of $15,000 in 2023 (which is the same amount available to married or common-law taxpayers who support their spouse). This amount increases with inflation each year.

Other details

  • If you are claiming $15,000 because you support a spouse or common-law partner, you cannot claim $15,000 for an eligible dependent—and vice versa. You cannot claim both in the same year.
  • If the eligible dependent does have some income, you cannot claim the full $15,000. For example, if the dependent makes $5,000 in a year, you could only claim up to a maximum of $10,000 ($15,000 – $5,000) for 2023.

How do separations impact claiming an eligible dependent?

This is a common situation and occurs when you make support payments to your spouse and children. After the first year of separation, you cannot claim personal income tax credits for your spouse and children.

However, your spouse can claim the federal basic personal amount of $15,000, as well as up to an additional $15,000 for one child (assuming all other conditions have been met).

To determine the amount of the federal income tax credit, the gross tax credits are subject to a 15% rate and this amount is available to reduce federal income taxes.

Disability Tax Credit

If you suffer from a severe and prolonged impairment, you may be eligible to claim a disability tax credit on your personal income tax return. As well, if your child or an eligible dependant qualifies for the disability tax credit, the credit can be transferred to you.

What constitutes a severe and prolonged impairment?

There are three conditions which must be met:

  1. a severe and prolonged mental or physical impairment
  2. the impairment must restrict your ability to carry out a basic daily living activity, or you must dedicate a certain amount of time getting therapy for this impairment. The impairment should last at least one year or be expected to last a year.
  3. a doctor or nurse practitioner must sign a certificate to certify both conditions 1 and 2

What has the credit traditionally covered?

While the credit has traditionally been used by people who are blind or have mobility difficulties, the courts have issued favorable rulings for conditions such as attention deficit disorder, celiac disease and gluten-free diets.

How much is the Disability Tax Credit?

For 2023, you are eligible for a credit equal to 15% of $9,428.  A child under the age of 18 years is eligible for a supplement of $5,500 for a total of $14,928.

Adoption Expense Tax Credit

If you adopted a child under 18 in 2023, you will be entitled to a 15% tax credit for eligible adoption expenses incurred during the adoption period, up to a maximum of $18,210. This amount is increased every year because of inflation.

The tax credit is allowed in the year the adoption is finalized or recognized under Canadian law.

 What qualifies as eligible expenses?

Eligible expenses include:

  • court, legal and administrative expenses
  • reasonable travel and living expenses
  • fees paid to an adoption agency licensed by a provincial or territorial government and any other reasonable expenses required by such an agency
  • mandatory fees paid to a foreign institution and document translation fees
  • mandatory expenses paid for the child’s immigration

When must the adoption expenses be incurred?

The expenses must be incurred during the adoption period, meaning when the file is opened with the provincial ministry responsible for the adoption or when the application is made to a Canadian court. The period ends when the adoption is finalized or the child begins living with you.

Canada Caregiver Credit

The caregiver amount provides tax relief to caregivers of infirm dependent relatives, including parents, spouses, common-law partners and children.

The tax credit for infirm dependents that are 18 years of age or older is 15% of $7,999. You may be able to claim a maximum amount of $7,999 for each dependent.

The tax credit for infirm dependents under the age of 18 years of age listed below is 15% of $2,499. You may be able to claim a maximum amount of $2,499 for each dependent.

What other conditions must be met?

The dependent must meet all of the following conditions. The person must have:

  • had a net income of less than $26,782 in 2023,
  • relied on you for some or all of the basic necessities of life (food, shelter and clothing) due to an impairment in physical or mental function.

Non-infirm seniors that reside with their adult children do not qualify for the Canada Caregiver Credit.

What if I had to make support payments for a child?

If you had to make support payments for a child, then you cannot claim the caregiver amount for that child.

However, if you were separated from your spouse or common-law partner for part of the tax year in question due to a breakdown in your relationship, you can still claim an amount for that child if you do not claim any support amounts paid to your spouse or common-law partner.

How does it work if I split the claim with my spouse or common-law partner?

If you and another person support the same dependant, you can split the claim for that dependant. However, the total of the two claims cannot exceed the maximum amount allowed for that dependant.