One can claim another spouse as a dependent in Canada underline 30300. Both partners have to file tax returns separately. If one of the married couples has significantly low income or no income for a tax year, the other can apply for their partner as a dependant in the tax return.
In this article, we’ve provided the requirements information according to our client’s quires. Still, we recommend approaching an experienced lawyer who is ready to listen to you and give you the best advice.
What Qualifies as a Dependant in Canada?
In the simplest sense, dependent refers to someone who requires supports (in this case, financial support) from another person. Usually, an individual below 18 is considered as an eligible dependent.
Now, can a spouse be dependant in Canada? To answer this question, you have to consider the following things:
One can claim their spouse as a dependant if the partner is physically unfit to work. A spouse can also be dependant during pregnancy.
If you meet the requirements set by authority on line 30300 and line 30400, you can claim your spouse as a dependant on tax.
To avail Canada caregiver amount with ease, it is important to mention this in line 30300 of tax.
Federal income tax rates become greater in the amount the more one earns. Sometimes, one partner (married or common-law partners) receives a noticeably higher amount than the other partner. It usually increases the amount higher-earning partner whereas, the couple would be accounted for a much lower tax amount (if they have a relatively equal salary). In a scenario of large pay gaps, a higher earring partner has to support the lower-income person. To reduce the tax burden, a higher-earning partner can spill a portion between them.
Usually, a couple can list their offspring below legal age as a dependant. But one also shows their spouse’s children and adopted children (below legal age) as dependants. In both situations, one has to provide proof of financial support for that particular tax year.
How Much Can You Claim for Spouse on Taxes?
Federal income tax usually depends on the earnings of each individual. In the case of a spouse or common partners, taxes can be shared. The Canadian Revenue Agency has a tolerable deduction process through which spouses or common partners can share a portion of their taxes. However, monthly income and tax payments go parallel. One who makes more money pays more tax. In the case of a dependant spouse, you can claim spouse tax. If the defendant had no earned throughout the year or the earned amount is less than required ($13,229 for 2020 and $13,808 for 2021), a supporting partner can claim a total or a portion of the maximum tax.
The table below exhibits the tax rates for the year 2020:
Federal Income Tax
2020 Federal income tax brackets*
|2020 Federal income tax rates|
$48,535 or less
$48,535 to $97,069
$97,069 to $150,473
$150,473 to $214,368
More than $214,368
|* These amounts are adjusted for inflation and other factors in each tax year.|
For a more in-depth idea of the yearly income tax rate and calculations, look into the Provincial and territorial income tax index.
Some spousal tax credit can be claimed and merged on one of the partner’s tax returns:
One of the spouses should merge and claim the expenses for both. It is strongly advised to claim the combined medical expenses of both parties with the lowest taxable income spouse’s file.
Similarly, charities should be merged for both partners and claimed by one of the spouses. However, if the higher-income partner is taxed at the highest rate, the tax credit should be filed with that spouse.
Remember, spousal tax returns are always prepared and filed separately. While preparing them online, the software will automatically display spousal tax credit if applicable. For that, you need to update your marital status before December 31st of that year. You have to fill/tick the correct option from the following:
- Living Common-Law
- Divorced – once divorced, your status remains this way unless you remarry or live common-law
Which Tax Credits Can be Transferred to a Spouse?
If your partner has a lower income or is dependent on your income, there are ways to split the amount of money to balance the tax rate. According to The Canadian Revenue Agency (CRA), you can claim spouse tax retirement or pension plan and non-refundable taxes. In the case of supporting a spouse or common partner, CRA allows to share half of the pension amount of the earning member, thus split the income and balanced taxes.
Another way you can transfer credit to your spouse is the non-refundable amounts you pay for them. In this case, both parties can share the taxes for adoption, medical expenses, and student share. To support your spouse or common partner, these two portions you can share with them. The amount for these two will be separated from your whole income and divided between both parties. However, to do so, the higher-earning member between two has to claim for the credits. If the lower-earning member claims for this, there is a possibility that it will get rejected.
Transferring Deductions: The CRA offers the option to transfer deductions on tax payments between you and your partner. To get maximum facilities from these, the partner with bigger earning should apply for this claim.
You can go through line 32600 of the tax act to know more about amounts transferred from your spouse or common-law partner.
In Case of Separation
If you are separated for voluntary reasons (like mental breakdown), the supporting spouse can claim for the duration lived together. For involuntary reasons (like job, schooling, or serving time in the prison), the supporting spouse can file a dependant claim.
You can also claim this if your spouse or common-law partner is a non-resident of Canada. To check if the non-resident spouse is being supported by you, the CRA will consider:
- The income of the supporting spouse;
- Any support provided to the spouse by government agencies of the country in which such person resides, such as pensions, medicare, housing, etc.;
- The cost of living in the particular country and the ability of the spouse to provide self-support; and
- Any support provided to the spouse by other individuals
This subject is also mentioned in line 30300.
Preparing a tax file can be tiresome and confusing, but focusing on one issue at a time can eliminate that enigma. However, it is great for new taxpayers to consult a lawyer for preparing a complicated tax file where spouses above 18 are claimed as dependants.