Common-Law Partner

CRA accepted that “common-law partners” (Mr. X and Ms. Y), who had been living in a home owned by Mr. X, would cease to have the quoted status 90 days after they had started living separate and apart (albeit, still residing in Mr. X’s house), so that Ms. Y could thereafter make a home buyer plan (HBP) withdrawal from her RRSP without running afoul of the rule (in para. (f) of the definition in s. 146.01(1)). CRA stated, regarding the "common-law partner" definition:

This definition deems persons who at any time are cohabiting in a conjugal relationship to be so living at a particular time after that time unless they were living separate and apart at the particular time for a period of at least 90 days that includes the particular time because of a breakdown of their conjugal relationship. Once that 90-day period has elapsed, the effective date of the change in family status is the date on which the two persons began to live apart. For that purpose, the CRA's long-standing position is that two individuals can live separate and apart while remaining in the same household.

A common-law couple, on the 85^th day after they started living separate and apart due to a relationship breakdown, carried out a split-up of the business corporation jointly owned by them (i.e., a spin-off of half the business to a Newco owned by one of them) in reliance on the s. 55(3)(a) exception from s. 55(2). After the 90^th day, they were no longer deemed under the s. 248(1) “common-law partner” definition to be common-law partners and, thus, ceased to be related.

CRA indicated that this did not retroactively cause them to not be related for purposes of applying the tests in ss. 55(3)(a)(i) to (v) to the split-up reorganization of a few days earlier.

CRA accepts the family law jurisprudence that former spouses or common-law partners can potentially qualify as living separate and apart even if they are living under the same roof (e.g., pending sale of the house), and cited the criteria in M. v. H, [1999] 2 S.C.R. 3 of “shared shelter, sexual and personal behaviour, services rendered between them, social activities and relations, economic support and children, as well as the societal perception of the couple.”

Are two individuals "common-law partners" if they have not shared the same roof over a period of one year ending before the particular time? After noting the criteria adopted in M. v. H,. [1999] 2 S.C.R. 3 of “shared shelter, sexual and personal behaviour, services, social activities, economic support and children, as well as the societal perception of the couple,” CRA stated:

[T]he mere fact that two persons do not live together does not in itself prevent them from being considered to be in a conjugal relationship for the purposes of the Act.

If two persons have been in a conjugal relationship for at least one year, we consider them to be common-law partners for the purposes of the Act.

A Taxpayer living in France (initially described as non-resident) frequently sees another person (the "Other Person") who lives the year half and half in Quebec and France, but they have never lived together in the same home for more than six consecutive months. They signed a Solidarity Pact but are not spouses. Would the Taxpayer and the Other Person can be considered common-law partners in Canada? CRA responded:

In general, the characteristics that identify a conjugal relationship are sharing the same roof, personal and sexual relationships, services, social activities, financial support, children, and social perception of the couple. …

In the absence of a complete description … we cannot determine whether a conjugal relationship … exits … . The fact that two people live in the same home only half a year would not prevent us from concluding that they live in a conjugal relationship.

Regarding a requested clarification of the meaning of "cohabits… in a conjugal relationship" in the definition of "common-law partner." After a review of jurisprudence on the phrase, CRA stated:

[W]hile there are several elements to be considered in determining the existence of a conjugal relationship, it is not necessary that all of the elements be present in a particular situation. Furthermore, as emphasized by the Supreme Court of Canada justices, the weight to be given to each of the elements to be considered may vary from one situation to another. For example, two persons not living in the same household may be considered, for the purposes of the Act, to be living in a conjugal relationship based on their own circumstances.

Common-law partners (Monsieur and Madame) had a child of their union, and then lived separate and apart starting on April 15, 2004, and then resumed their life together on November 1, 2004. On what date will they again be considered "common-law partners"?

CRA stated:

[S]ince on November 1, 2004, Monsieur and Madame were cohabiting in a conjugal relationship and had a child from their union, they will be considered to be common-law partners from that date. …

[B]ecause Monsieur and Madame had a child together, they will never be subject to the 12-month cohabitation period since it applies only to common-law partners without children.

The transitional rules relating to the definition of “common-law partner” added to s, 248(1) in June 2000 provided that an election may be made by eligible persons to have this definition apply to them retroactively effective from 1998. In finding that this election could be made even if one of them had since died, the Directorate noted that the term “person” (referred to in the election provision) was defined in s. 248(1) to include, among others, heirs, executors, administrators or other legal representatives of a person.

The Agency indicated that, pursuant to amendments passed on June 29, 2000, the concept of common-law partner now included both same-sex and opposite-sex couples, including for Home Buyers' Plan (HBP) purposes. However, those rules only applied to home acquisitions made after 2001 unless the same-sex couple made a timely joint election to have such new amendments apply during the 1998, 1999, or 2000 taxation years.