The number of Canadians entering into common law relationships is increasing now more than it ever has. As such, there is a greater need for the general public to understand what a common law relationship in Ontario is and what it encompasses. For example, what is the legal definition of a common law relationship? Does this definition differ for tax purposes? Are common law partners entitled to the same legal rights as married spouses? Do partners need to prove their relationship? If so, how?
These are some of the more complicated questions pertaining to common law in Ontario. Let’s begin to address some of them.
Common Law Marriage Defined
In Ontario, parties are considered to be in a common law relationship if they have been living in a conjugal relationship for at least three years or they have a child together (including adoption) and have been living together for one year and are in a relationship of some permanence. These are the requirements for establishing a common law relationship in Ontario.
The Canadian Revue Agency (“CRA”) has a slightly different definition or requirement for what constitutes a common law relationship. Under the CRA, in order to be considered common law for tax purposes, the parties must be a conjugal relationship over the past 12 months.
It is important to note that couples cannot be both common law and married. It’s one or the other, but not both.
Filing for Common Law
If you meet the definition of a common law partner, you must indicate that you are living in a common law relationship on your tax return. You and your common law partner must each file your own tax return with the CRA. Along with your own personal information, you must include your common law partner’s name, social insurance number and their net income (even if it is zero) on your return.
This is particularly important in regards to government benefits. The CRA calculates government benefits based on household income. This means the CRA combines the income for both partners to determine eligibility for certain tax credits and benefit amounts.
When filing as a common law relationship, the parties will be required to show proof of their common law status. This can be done in an array of ways, which include providing:
- Shared ownership of residential property
- Joint leases or rental agreements
- Bills for shared utilities, such as
- Gas, electricity, telephone, joint utility accounts
- Important documents for both parties showing the same address, such as
- Drivers licenses, insurance policies
- Identification documents
Parties are not required to include all of the above to prove the relationship is real. The CRA may also consider other proof as well.
Common law couples are free to enter into a Cohabitation Agreement, which is one of several domestic contracts parties can enter into. For common law couples, a cohabitation agreement can set out how the assets will be divided upon separation, as well as other issues. This is particularly important because under the Family Law Act (“FLA”), common law couples are not entitled to equalization or the matrimonial home after separation (more on this below). Entering into a Cohabitation Agreement is one way to circumvent any such issues.
Common Law vs. Marriage: What’s the Difference?
Overall, there aren’t any significant differences between marriage and common law during the existing relationship. The significant differences however come along in the event of divorce or separation. Below are some examples of the differences and similarities between married and common law couples upon separation.
Separation in a Common Law Relationship
There is no formal process required for common law couples wishing to separate. They can simply choose to dissolve their relationship at any time. However, if couples have been living together for some time or if there are children involved, the dissolution of the relationship can be complicated. Specifically, upon separation, the legal rights of common law couples are not the same as married couples.
The Matrimonial Home
In Ontario, the FLA provides that the matrimonial home is granted special status for married couples. This special status is not extended to common law couples. Common law couples may have a “family home”, but it does not have the same status as a matrimonial home. Essentially, this means that when common law couples separate, the house will go to whoever’s name is on the title. This means that they can force the other party to leave the home upon separation. Not so by marriage, where one party cannot force the other to leave the matrimonial home.
Division of Assets/Equalization
Under the FLA married couples are entitled to equalization and a division of assets upon the breakdown of the relationship. Common law couples however, are not afforded the same rights. Common law couples are not entitled to equalization or a division of property upon the breakdown and dissolution of the relationship.
While common law couples are not entitled to any property rights, they can make a claim for constructive trusts based on an unjust enrichment. A claim like this will arise usually when one of the parties feels that they have contributed extensively to an asset that belongs to the other party, and that it would be unjust for that party to retain the full value of that asset.
The Supreme Court of Canada in Kerr v Baranow outlined the test one must satisfy in order to prove unjust enrichment. The party claiming unjust enrichment must prove the following:
- There was an enrichment of or benefit to the defendant;
- There was a corresponding deprivation to the plaintiff as a result of the enrichment; and
- There’s an absence of juristic reason for the enrichment
Spousal & Child Support
Common law couples are entitled to, or required to pay, spousal support under the FLA. The same holds true for child support. In Ontario, children have a legal right to financial support from both parents, and both parents have a legal responsibility to provide this support. This includes parents who were married or were in a common law relationship.
Nussbaum Law is a Toronto based law firm that exclusively practices family and divorce law.