Joint tax liability is a federal spouse being liable for the other’s tax debt. But a federal spouse is different from a Provincial spouse. Canada has no jurisdiction over Provincial spouses. This means you can structure your affairs to stop joint tax liability.
The Income Tax Act (“ITA”) allows Canada to deem spouses as having joint tax liability. But it seems no one can explain where this comes from. However, Apu’s Theory, our research on how income tax seems to really work, explains it. So far it has been 100% successfully applied against CRA joint tax liability proposals.
We wrote earlier about where joint and several liability comes from. Canada’s ITA states someone not at arm’s length, such as a spouse, can be jointly and severally liable. At first glance, this makes no sense since marriages are ordinarily under Provincial jurisdiction!
Marriages, being a civil right, are ordinarily under Provincial jurisdiction. This means Canada does not, and cannot, have jurisdiction over Provincial marriages and their spouses. However, we have a CRA joint tax liability proposal letter using the phrase, “federal spouse”. It is shown below.
CRA has no jurisdiction over Provincial spouses
Canada, of course, has jurisdiction over any federal spouse. But what is a CRA federal spouse? Using Apu’s Theory, CRA’s T1 General tells us what a federal spouse could be.
According to Part 2 of Apu’s Theory, CRA’s T1 General Income and Benefit Returns are for filing Canada’s “public money” received by an individual representing a federal ITA “officer”. In addition, the T1, on page 1, asks for the marital status. It follows a CRA federal spouse is an individual representing a federal ITA “officer”.
A CRA federal spouse is an individual representing a federal ITA “officer”
Since it seems there are two types of spouses, the marital status of a Provincial one could be different from a federal one. In conclusion, this CRA federal spouse joint tax liability letter corroborates Apu’s Theory.
To date we have helped all 5 couples successfully stop their CRA joint tax liability proposals. If you are interested, contact us.