Stopping Joint Tax Liability for a Federal Spouse

Why Joint and Several Liability For Income Tax Liens
October 8, 2018
Why Income Tax Is Not Contractual
November 5, 2018
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Stopping Joint Tax Liability for a Federal Spouse

Stop having joint tax liability for your federal spouse.

Stop having joint tax liability for your federal spouse.

Summary

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.

Background

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.

The Law

ITA Joint Tax Liability

We wrote earlier about where joint and several liability comes from. Canada’s ITA[1] 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 Under Provincial Jurisdiction

Marriages, being a civil right, are ordinarily under Provincial jurisdiction[2]. 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

Part of a CRA joint tax liability proposal letter, using "federal spouse".

Part of a CRA joint tax liability proposal letter, using the phrase, “federal spouse”.

What is a Federal Spouse?

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.

T1 General: for a Federal Spouse?

According to Part 2 of Apu’s Theory, CRA’s T1 General Income and Benefit Returns are for filing Canada’s “public money”[3] received by an individual representing a federal ITA “officer”[4]. In addition, the T1, on page 1[5], 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”

 

A T1 form asks the marital status of a CRA federal spouse

Conclusion

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.

Stopping Joint Tax Liability

Stop joint tax liability for federal spouses!

To date we have helped all 5 couples successfully stop their CRA joint tax liability proposals. If you are interested, contact us.

 

  1. In Canada’s ITA, Section 160: https://laws-lois.justice.gc.ca/eng/acts/I-3.3/page-187.html#docCont
  2. The Constitution Act, s.92(12): “In each Province the Legislature may exclusively make Laws in relation to Matters coming within the Classes of Subjects next hereinafter enumerated; that is to say, The Solemnization of Marriage in the Province.” https://laws-lois.justice.gc.ca/eng/Const//page-4.html#docCont
  3. Public money” as defined by Canada’s Financial Administration Act: https://laws-lois.justice.gc.ca/eng/acts/F-11/index.html
  4. “Officer” as defined under the definition of “office” in the ITA, s.248(1)
  5. CRA T1 General from 1985 onwards: https://www.canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years.html

 

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