Are There Tax Benefits for Married Couples in Canada?
Wondering whether your recent nuptials come with tax perks? There are significant tax benefits for married couples in Canada! We're breaking them down in this common law tax guide. Here's everything you need to know about filing your taxes with your other half.
Do married couples have to file taxes together in Canada?
The obvious question - and the answer might surprise you. Regardless of whether you're married or in a common-law relationship - you won't actually file jointly in Canada. Instead, every Canadian taxpayer files their own tax return and indicates their marital status on the return, as well as includes information about their spouse.
Once you're married, you must include your spouse on your tax return.
Do common law partners have to file taxes together in Canada?
You must indicate your common-law status in your annual tax return.
You don't actually get to pick when to consider yourself a common-law partner - the CRA guidance states if you've lived for your partner in a conjugal relationship for 12 months, you're considered a common-law partner. If you have a child, you'll be considered common-law partners as soon as you move in with that partner.
If any of these circumstances apply to your situation - you must indicate this marital status in your annual tax return.
What information do I need to include about my spouse in my tax return?
You can do this in the “information about you” section of your tax return. You’ll need to include information about your spouse, including:
Their social insurance number
Their employment status
If you’re using tax software like TurboTax, you may be able to prepare a “coupled” return. This means you’ll file information for you and your partner together, but you’ll still file separately with the CRA.
What's the tax rate for married couples in Canada?
Married or common law - you'll pay the same Federal and Provincial Income Tax rates as other Canadian taxpayers - though the amount of Federal Income Tax you pay may be different due to shared benefits.
What are the tax benefits for married couples in Canada?
It's good news for your tax return when you're married or in a common-law relationship, as you can reap the tax benefits. You may be eligible for more tax credits and deductions than if you were filing as a single taxpayer and this can help you reduce your overall tax bill for the year.
Let’s take a look at the different tax breaks available.
Spousal Tax Credit Canada
The Basic Personal Amount is a non-refundable tax credit that any Canadian taxpayer can claim. It lets Canadian taxpayers claim back all the Federal Income Tax paid on an income provided they earn less than the BPA, which was $15,000 for 2023 and $15,705 for 2024.
If you’re married or in a common-law partnership and one partner earns less than the BPA, the other partner can use the difference to lower the amount of tax they owe by claiming the Spousal Tax Credit. For example, if you earn $60,000 a year and your partner earns $10,000 a year, you’d be able to claim the difference between your partner’s income and the BPA.
Split Capital Gains and Investment Dividends
You can also split investment dividends or capital gains between you and your spouse - like gains from crypto or other assets - between spouses to save on Income Tax. If one partner is in a lower Income Tax bracket, it’s beneficial to split any profits between both of you.
Many partners hold their investments together and if you plan right, this can help you reduce your taxes. Let’s use crypto assets as an example and say a married couple holds 10 ETH together and later sells their 10 ETH. If they contributed equally when purchasing the ETH, the subsequent capital gain from selling the 10 ETH would be taxed 50% at one partner’s Income Tax rate and 50% at the other partner’s Income Tax rate.
When filing your tax returns, you’ll declare the asset(s) - 10 ETH in this instance. But you’ll put 50% in the box on your tax return that asks what percentage has been claimed by a spouse.
However, it’s important to note that when splitting investment profits, this needs to be legitimately based on the actual amounts contributed by each partner. So you can’t claim all crypto assets are split 50/50 between you both just to get a tax advantage.
For example, if in the above scenario, one partner contributed 75% of the cash to purchase the ETH and the other partner contributed 25%, the subsequent gain should be split by those proportions too.
In a tax audit, the CRA may ask to see bank transfers between spouses to verify the legitimacy of the claimed split. For example, if one partner sent all the funds to an exchange to buy the ETH, they’d expect to see evidence showing the other partner sending them funds to cover their share of the joint investment.
Transfer Tax Credits
A great perk for married couples is the ability to transfer certain tax credits from one spouse to another if you don’t utilize the full credit. Tax credits that you can transfer to your spouse include:
Pension income amount
Disability amount for self
How to file taxes as a married couple Canada
Want to know how to file taxes as a married couple or learn how filing taxes as common-law partners works?
As you file individually, many of the steps are similar to how you would file as an individual taxpayer - it's just the information in that tax return that will be different. You'll need to file an annual tax return with the CRA by April 30 each year.
The actual steps involved in filing vary depending on whether you're filing online via the CRA portal, by post, using tax prep software like TurboTax or using an accountant. But in order to receive the tax benefits as a married couple, you'll need to make sure to prepare and file ahead of the deadline and claim any credits, transfers or splits.
Bonus: How to file crypto taxes with the CRA
Crypto is subject to Capital Gains Tax or Income Tax in Canada - depending on whether your activities are viewed as an individual investors’ or as business-like. You can learn more about how crypto is taxed in Canada in our Canada Crypto Tax Guide.
You’ll need to report any capital gains and losses from crypto, as well as any income from crypto, to the CRA as part of your annual tax return. You’ll report crypto capital gains and losses on Schedule 3 Form and additional income from crypto on the Income Tax Return T1.