The Fine Print Canada · PUBLISHED 16 JUL 2026 · VERIFIED 16 JUL 2026 · CA EDITION

Your Guide to CRA Common-Law Rules: The 12-Month Tax Switch

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A couple that moves in together can lose or gain thousands of dollars in household-tested benefits because the CRA treats them as one household after 12 continuous months of cohabitation, or immediately if they share a child.

The number that matters

The central number is 12 months: that is the CRA’s common-law threshold for tax purposes, after which your status changes and benefits are recalculated using combined household income.

How it quietly costs you

The first hidden cost is that household-tested credits can shrink or disappear once the CRA combines two incomes into one family unit. The mechanism is simple: programs such as the GST/HST credit and Canada Child Benefit are based on adjusted family net income, so a second income can push a couple over eligibility or reduce the amount paid.

A concrete example is the spouse or common-law partner amount: in 2026, the partner’s net income must be below the claimant’s basic personal amount, or below the basic personal amount plus $2,687 in the caregiver case, to qualify for the federal amount. That means a move-in that changes household status can remove a credit worth roughly a few thousand dollars of tax relief, depending on income and province, even though the couple does not file jointly.

Old vs better: before common-law status, each person may have been treated as a separate household for income-tested benefits; after common-law status, the CRA usually treats them as one household for those programs.

The second, compounding trap

The second layer is the reassessment and clawback risk when status is not updated on time. The CRA says you must report the new marital status by the end of the following month after it changes, and it can reassess prior filings for years when you were common-law.

The quantified cost of inaction is that missed updates can trigger benefit repayments or retroactive reductions once the CRA recalculates credits like the GST/HST credit and CCB using combined family income. Because the reassessment can apply to prior tax years, the long-run cost can compound beyond one year of missed reporting.

What this looks like in practice

Maya, 29, Toronto marketing coordinator, earns $58,000 a year, lives with her partner who earns $46,000, receives the GST/HST credit, and has been living together for 10 months; they expect to buy a home in about 18 years.

• She discovers that once they hit 12 continuous months, CRA common-law status starts even if they never married, and they must update the CRA by the end of the following month.
• She discovers that her household-tested benefits can drop because the CRA uses adjusted family net income, not separate incomes, for credits like the GST/HST credit and CCB.
• She discovers that the spouse or common-law partner amount can be available only if the partner’s net income is below the claimant’s basic personal amount threshold, with the caregiver version adding $2,687 to the limit in 2026.

The full cost of doing nothing

For Maya, the combined cost of Problem 1 and Problem 2 is the loss of household-tested benefits plus any retroactive clawback from late reporting, which can amount to thousands of dollars over the first common-law year and beyond if the CRA reassesses prior returns.

This estimate is based on CRA treatment of common-law status, household-based credit testing, and reassessment rules; the exact dollar amount depends on the couple’s combined income, number of children, province, and whether they qualify for credits such as the GST/HST credit or CCB.

What to do about it

• Update your marital status in CRA My Account within 30 days of becoming common-law, then verify that all benefit profiles reflect the new household status.

• Sign in to your CRA account.

• Open Individual account > Profile > Marital status > Edit.

• Confirm the change date and save it.

• Good looks like: the status change is recorded by the end of the following month after the change.

• Check whether you still qualify for the GST/HST credit and Canada Child Benefit using CRA’s benefit pages and your family net income.

• Review the benefit section in your CRA account.

• Compare your combined income against the eligibility rules shown on the CRA pages.

• Note whether the payment is reduced, stopped, or unchanged.

• Good looks like: your household income is still below the credit’s cutoff, or you understand the exact amount that will be reduced.

• Review whether you can claim the spouse or common-law partner amount and any transferred credits on your next return.

• Open Schedule 5 and Schedule 2 in your tax software or paper return.

• Check the partner’s net income against the federal threshold for the relevant year.

• Confirm whether any unused non-refundable credits can be transferred.

• Good looks like: you claim only credits the CRA allows, with no missing transfer or overstated amount.

A myth worth clearing up

Myth: “Common-law only matters if you get married legally.” Fact: For CRA tax and benefit purposes, common-law status can begin after 12 continuous months of living together, or immediately if you share a child, and it changes how benefits and credits are calculated.

Sources

• https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-30300-spouse-common-law-partner-amount.html
• https://www.canada.ca/en/revenue-agency/services/tax/individuals/life-events/spouse-common-law-partner.html
• https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-32600-amounts-transferred-your-spouse-common-law-partner.html
• https://www.canada.ca/en/revenue-agency/services/child-family-benefits/update-your-marital-status-canada-revenue-agency.html

Researched 2026-07-16.

Corrections & disclosure: an AI-assisted, human-reviewed guide. Every figure is dated and sourced above. Spot something out of date or wrong? Tell us and we’ll correct it — corrections are noted here and in the video description.