There’s no age limit for getting married—or for ending a relationship that’s not working anymore. Either way, these life events will change your marital status and affect your finances and retirement plan. Want to learn more? Just say, “I do!” and keep reading.
Tax implications for new couples
When you’re newly married or become common-law partners, you’re often in the honeymoon phase and might overlook some things that—let’s face it—don’t seem that urgent. For example, newlyweds or common-law partners are required to disclose their partnership to the tax authorities on their next income tax return.
On the one hand, being married or living common-law could make you eligible for certain credits or benefits and lower your taxes. On the other hand, your new marital status might have a negative impact on your taxes, benefits and allowances. As they say, there’s no rose without a thorn!
What is a common-law partner?
If you’ve been living with someone who you aren’t married to, but you’ve been in a conjugal relationship with them for more than 12 months, or if you’ve adopted or had a child with someone, the CRA considers you to be in a common-law relationship with that person.
Also, for the CRA, Revenu Québec and Ontario taxation purposes, married and common-law partners have the same tax advantages. Here are some of the tax benefits you may enjoy:
Tax advantages of being married or in a common-law relationship
- You can receive a tax credit (amount) for spouses and common-law partners and transfer unused tax credits between spouses.
- You can contribute to a spousal RRSP.
1 - You can bequeath a TFSA or RRSP to the spouse without affecting their contribution room in the event of death.
- You can split up to 50% of eligible pension income with the spouse, resulting in tax savings.
- You can transfer assets to a spouse without immediate tax consequences.
Building family patrimony or parental union patrimony (Quebec) and family property (Ontario): A key consideration
Marriage is a celebration of love. But it’s also a legal contract that unites two people and has a lot of implications, especially financial ones. A unique feature of marriage is the creation of a “family patrimony” in Quebec and “family property” in Ontario.
As well, since the parental union regime has come into effect in Quebec, a special legal framework applies to couples in common-law relationships who have or who adopt a child. It’s called a parental union, and it creates a parental union patrimony that involves pooling certain assets.
Quebec
What is family patrimony?
Family patrimony is created during a marriage or civil union by pooling certain assets owned by you or your spouse and used for your family’s needs—whether or not you have children.
The purpose of creating a family patrimony is to achieve legal and economic equality between spouses in the event of divorce or death.
How is the family patrimony divided when a couple divorces?
In the event of divorce or death, the value of the property included in the family patrimony is determined and divided between the spouses. Here’s a non-exhaustive list of assets subject to the partition of the family patrimony:
Property included in the family patrimony
- Family homes and items used to furnish or decorate it, used by the household
- Motor vehicles used for family travel
- Retirement savings products (RRSPs, LIRAs, RRIFs, LIFs and pension funds)
- Earnings registered under the Act Respecting the Quebec Pension Plan (QPP)
Examples of property excluded from the family patrimony
- Income properties
- Businesses
- Savings and personal accounts (except income properties or businesses)
- Individually owned stocks and bonds
- Jewellery and other personal property
- Property received as a gift or inheritance
However, it’s important to note that depending on the matrimonial regime External link. the spouses choose (such as a partnership of acquests), other assets may have to be divided.
What is a parental union?
De facto spouses who have one or more children who were born or adopted on or after June 30, 2025, are automatically in a parental union. Through a notarial act en minute, and subject to statutory conditions, these couples can opt out of a parental union.
De facto spouses without children, or those whose children they’ve had together were born or adopted before June 30, 2025, are not automatically in a parental union. De facto spouses who already had children together before this date are only subject to the regime if a new child is born or adopted after this date, or if they decide to opt into it voluntarily, subject to statutory conditions.
A parental union creates parental union patrimony that includes certain assets owned by the spouses and requires that they be equally divided at the end of the union, whether by separation, death, marriage, civil union or dissolution of the parental union.
Property included in the parental union patrimony
- Family homes and items used to furnish or decorate it, used by the household
- Motor vehicles used for family travel
Examples of property excluded from the parental union patrimony
- Retirement savings products (RRSPs, LIRAs, RRIFs, LIFs and pension funds)
- Earnings registered under the Act Respecting the Quebec Pension Plan (QPP)
- Property received as a gift
- Property received through an inheritance
Ontario
What is family property?
Family property is created during a marriage or civil union by pooling certain assets owned by you or your spouse that are used for your family’s needs—whether or not you have children. Family property also includes debts, such as mortgages, car leases and other loans.
The purpose of sharing family property is to achieve legal and economic equality between spouses in the event of divorce or death.
How is family property divided when a couple divorces?
In the event of a divorce or death, the value of all family property acquired by the spouses during the marriage and still existing at the time of separation is identified and divided between the spouses.
Here are some examples of property covered by the division of family property in Ontario External link.:
Property that can be divided
- Family and secondary homes
- Vehicles and furniture
- Retirement savings products (RRSPs, locked-in RRSPs, RRIFs and pension funds)
- Businesses
- Savings and personal accounts
- Individually owned stocks and bonds
Note that in Ontario, generally any increase in the value of assets owned by one spouse before the marriage is divided between both partners. This rule applies to the marital home in which the spouses live.
Property that cannot be divided
- Proceeds from an insurance policy paid out upon the death of the insured
- Amounts received as damages for personal injury
- Property that is to be excluded from the net family property of one spouse under the domestic contract between the spouses
- Property given as a gift or inheritance and acquired by the spouse from a third party after the marriage, excluding the marital home
Did you know?
In Quebec, common-law partners are generally not required to divide the property acquired during their union equally unless they are subject to the parental union regime, which creates a parental union patrimony that may be divided, or if they have made specific arrangements in a cohabitation agreement. Otherwise, as is the case in Ontario, common-law partners are not automatically required to divide their property, but they remain responsible for any debts they have taken out together.
What happens to your retirement plan when you divorce?
If you have a joint retirement plan, you should review it after any major changes in your family situation, such as a divorce, end of a civil union, separation or end of a parental union. Each situation involves specific rules about whether pension plans and funds will have to be shared with your partner, including earnings from the QPP, CPP or other equivalent programs and pension plans (RRSPs, RRIFs, pension funds, etc.).
To make sure you maintain the standard of living you want, we suggest you re-evaluate your savings and adjust your retirement plan. This will allow you to take your new situation into account and the resulting impact on your budget.
Tips to make your life easier
Some food for thought as you begin a new chapter
Now that your separation is a thing of the past, are you considering living with someone new? Take some time to think about different aspects of managing your finances and life together. For example:
- Should you open a joint account? A joint account can be used to deal with joint expenses, while your individual accounts are left intact, to be used for things like direct deposit of your salary. Take the time to assess the implications and what works best for your situation.
- Couples in a common-law relationship may wish to consider a cohabitation agreement External link. (Quebec) or a domestic contract or cohabitation agreement External link. (Ontario) to set rules in advance about dividing property and each person’s obligations if they separate. These types of contracts are used to arrange a fair division that is right for your situation, since common-law relationships do not automatically create a legal framework for dividing property, as is the case for couples that are married or in a civil union.
Note that for de facto spouses in a parental union, a parental union patrimony is created. Subject to statutory criteria, partners can choose to voluntarily include more assets or to exclude them, where applicable conditions allow.
Any major change in your life, such as a new marital status, is an opportunity to review certain aspects of your finances and re-examine your priorities. Take this opportunity to review your insurance coverage and your designated beneficiaries. While you’re at it, why not also review your will to make sure it truly reflects your final wishes?
Reach out to a legal professional for help if you have any concerns about these issues.
Also contact your financial advisor, whether things are going well or not! They’ll be able to help you develop a budget, create a detailed retirement plan or even adjust it based on your new reality and your goals.
Useful link
Change your marital status (Canada): https://www.canada.ca/en/revenue-agency/services/child-family-benefits/update-your-marital-status-canada-revenue-agency.html External link.