According to the 2016 census, 17.0% of those living as a couple are common law in Newfoundland and Labrador.
When you live in a marriage-like arrangement with a partner, after two years you meet the Newfoundland and Labrador common law definition.
Being considered common law varies from province to province and does not agree with the federal government's definition.
The federal common law definition is living in a conjugal relationship for a minimum of twelve months. Other qualifying factors include having a child together or someone who financially supports your child.
When you reside with someone outside of traditional marriage, you need to understand the Newfoundland and Labrador common law regulations that govern this type of partnership.
How to Prove to CRA that We Are Common Law
The Canadian Revenue Agency (CRA) is responsible for administering Canadian tax laws for both the federal government and most territories and provinces. It is important this agency understands you qualify as a Newfoundland and Labrador common-law partnership.
Documents that prove you are in a common-law relationship include shared ownership of residential property, a joint lease or rental agreement, or other documents.
Shared Ownership of Residential Property
The rights to those who have a traditional marriage are not extended to common-law partnerships. Because of these laws, it is advisable to make sure both partner's names are on the title of any residential property.
A common-law spouse who owns a home can legally kick their partner out of the home at any time. Even if you have an amicable separation the person who owns the house is entitled to the home and the other person must leave. You only receive compensation for your financial investment if your partner agrees or you are on the title.
If your home is in your partner’s name only and they die, you do not inherit the home unless they designate you as a beneficiary of the home in their will.
Joint Leases or Rental Agreements
Almost 33% of Canadian residents rent their homes. You and your partner need to discuss how much the two of you can afford for monthly housing expenses. This is especially important if one of you earns a considerably higher wage than the other.
Financial experts recommend a 30% rule. This means that you should not spend any more than 30% of your gross income. If your gross income is $3,000 per month, your rent should be $900 or less per month.
Bills for Shared Utility Accounts, Such as Gas, Electricity…
When you own or rent a residential location, it is advisable to have all bills for gas, electricity, telephone, etc. show both names. These billing documents are one of the ways you may prove to the CRA you are in a common-law relationship.
When in a long-time relationship you may be wondering if you should get a joint bank account to make bill paying easy. While there are advantages to having a joint account, both people have equal access to the funds. If your partner withdrawals all funds they have done nothing illegal.
Documents Showing the Same Address, Such as Driver’s Licenses
To prove your relationship meets common law requirements, you need several documents. This includes utility bills under both names. Insurance policies and driver’s licenses also prove you reside at the same location.
In Canada the acceptable forms of identification are the same as those acceptable for airline travel and include:
- Citizenship or permanent resident card
- Provincial or Territorial Driver’s License, health card, government ID
- Birth Certificate
- Confirmation of Permanent Residence (IMM 5292)
- Immigration documents issued to foreign nationals
- Federal police ID
- Canadian military ID
- Provincial or federal government employee ID
- Old Age Security (OAS) ID
- Certificate of Indian Status card
- NEXUS card
- Firearms License
Hunting, fishing, and boating licenses are not acceptable identification.
How Long After Living Together Are Considered Common Law
After you reside together for twelve consecutive months in Newfoundland and Labrador you are considered to be a common-law partnership. This means you and your partner are cohabitating with all your affairs combined and set up in one household together. A common law relationship ends when one partner dies or the parties no longer reside in a conjugal relationship.
What Is a Cohabitation Agreement?
A cohabitation agreement in Newfoundland and Labrador is permitted under the Family Law Act.
It provides you and your partner authorization to sign a contract stating your rights and obligations in the relationship. This includes specifics about assets, bills, and how things will be divided if you separate.
Is It a Good Idea?
Having a cohabitation agreement is advisable because there are no marital property rights. The agreement provides security in the event you separate. This does not replace a will for ensuring your partner inherits your assets in the event of your death.
Can I Make One Before My Spouse Moves In?
Signing a cohabitation agreement prior to residing together is preferable. This guarantees each partner understands their rights and obligations. A cohabitation agreement is a contract and if it complies with the law it may be upheld in court.
How Much Does It Cost?
The cost you pay for a cohabitation agreement depends on individual lawyer fees and the size of your estate. Two established partners with their own real property, investments, and other assets will require a more detailed cohabitation agreement than a couple just starting out with minimal possessions. The best way to determine cost is to consult with two or three attorneys for a quote.
Do I Need a Lawyer for One?
You do not need a lawyer to write a cohabitation agreement, but it is advisable. Using an attorney assures your agreement meets all legal requirements making it enforceable. They will know and follow all laws for disclosure, signatures, and witnesses.
Do We Have to File Taxes Together?
In Newfoundland and Labrador, you need to file Form 5001-R Income Tax and Benefit Return. Each person files their own return and under marital status checks the box that applies. Living common-law is one of the selections.
For tax purposes, common law applies to couples in conjugal relationships for a minimum of twelve continuous months. Below the marital status box, you fill in the information regarding your common-law partner.
If you do not indicate on your tax return that you are living in a common-law relationship you may be found guilty of filing a fraudulent tax return. The penalty includes being reassessed for unpaid taxes, interest, penalties, and being denied CPP benefits.
What if We Have Children Together?
When you have children as part of a common-law relationship in Newfoundland and Labrador you can apply for child support if you separate. The rights and obligations for both support and custody of minor children are the same whether or not you are married. This applies to all territories and provinces.
When filing taxes the child benefit goes to the person responsible for the child. Only one parent may claim the benefit, and there is no splitting the credit.
What Not to Do In a Common Law Relationship
Do not assume that because you qualify as a common-law partnership in Newfoundland and Labrador you have the same rights as a legally married couple. For couples residing in this type of relationship, it is imperative you have a will to provide for your partner and children.
If you die without a will designating your partner as the beneficiary of your assets, they receive nothing unless titled in their name. That means they (and your children) could lose their home, vehicle, money in bank accounts, and more.
To make sure your partner and children are provided for it is advisable you speak with an attorney about drawing up wills. You may also want to consider purchasing life insurance to provide financial assistance should you die.
What Is My Partner or Spouse Entitled To?
Under common law in Newfoundland and Labrador if your name is not on the title to the home your partner may kick you out at any time. Each person remains the owner of all property they had prior to the relationship. Any property that is not titled in both names does not automatically transfer to the other in the event one partner dies.
What Happens If We Separate?
There are no set rules for separation. You can write your own separation agreement that is enforceable under the law. If you are unable to come to an agreement the same rules apply as those of a legally married couple.
Legally written and signed cohabitation agreements are enforceable under the law in the event of a separation. Verbal agreements are not.
Who Gets What in the Separation?
When going through a common law separation in Newfoundland and Labrador the Family Law Act allows you and your partner to enter a “separation agreement.” This agreement contains the same rights as if you were legally married. If you are unable to come to an agreement then the same rules apply to your separation as those of a legally married couple:
- Each person keeps their own personal property
- Each person keeps items owned prior to the relationship
- Each person is responsible for their personal debt
- Assets titled in both names are divided equally between the parties
- You may divide the Canada Pension Plan credits earned while residing together if the relationship is over 12 months
- You do not have a legal right to any real property unless your name is on the title
You may always file a claim with the court requesting property outside these rules. If you are able to prove an interest, such as payments made toward a mortgage, the court may award you a portion of the property.
Get the Best Quotes When Living Common Law
When living common law in Newfoundland and Labrador you need the best quotes on everything including health insurance, life insurance, mortgages, and more. Insurdinary.com saves you time by providing you with a cost comparison on products you need.
If you have any questions you are welcome to call us at 1-877-574-RISK (7475). You may also use our online form to send Insurdinary.com a message.