Claiming Non-Resident Spouse and Non-Resident Dependents

In Canada, a married or common-law partner can benefit from their tax return by claiming the spousal amount if one partner earned a significant income while the other earned no income or very little (less than the basic personal amount for the tax year). For 2024, the basic personal amount is $15,705.

Spousal Tax Credit and Its Importance

The spousal tax credit is a non-refundable tax benefit designed to reduce the tax burden for individuals who financially support their spouse. This can result in significant savings, especially if the higher-earning spouse is in a higher tax bracket. Overall, the spousal tax credit promotes fairness in the Canadian tax system by providing financial relief to couples.

Who Can Claim the Spousal Tax Credit

Any legally married or common-law partner in good standing can claim the spousal tax credit. To qualify, the spouse must have little to no income, which should be less than the basic personal amount. If both partners are residents of Canada and filing taxes, only one spouse or common-law partner can claim the amount for the other in the same tax year. Typically, the spousal amount is claimed if both partners reside in Canada during the tax year. However, if one partner is a non-resident, the taxpayer can still claim the spousal amount, provided certain criteria are met.

What Is a Non-Resident for Tax Purposes

A non-resident for tax purposes refers to an individual who does not reside in Canada or does not have significant residential ties to Canada. Typically, a non-resident is someone who lives outside Canada for more than 183 days during the tax year.

Spousal Tax Credit for Non-Resident Spouse

Claiming a non-resident spouse as a dependent on your tax return can be more complex. The taxpayer must meet certain eligibility criteria to claim the spousal credit. Below are the key points to consider:

Eligibility to Claim the Non-Resident Spousal Credit

The marriage or common-law relationship must be in good standing.

The non-resident spouse must have earned less than the basic personal amount for the year.

The taxpayer must have financially supported the non-resident spouse during the year and be able to provide proof if requested by the Canada Revenue Agency (CRA).

Proof of financial support must include the taxpayer's name, the amount provided, the date of payment, and the spouse's name and address. The support must cover basic needs, such as lodging, food, and clothing.

Tax Implications for Non-Residents

Income Tax: Non-residents are only taxed on income earned from Canadian sources, such as employment income, rental income, or capital gains from Canadian properties.

Eligibility for Benefits: Non-residents generally do not qualify for many Canadian tax credits and benefits, such as the Canada Child Benefit.

How to Claim the Non-Resident Spousal Amount

To claim the non-resident spousal amount in Canada, follow these steps:

Ensure Eligibility: Confirm that you meet all the necessary criteria to claim the spousal amount.

Gather Information: Collect your spouse’s net income (from all sources, inside and outside of Canada) for the year, and any supporting documentation confirming your relationship status.

File Your Taxes: Use the T1 General form to file your taxes. On Line 30300, enter the appropriate spousal amount for the tax year. For example, the spousal amount for 2024 is $15,705.

Complete Your Return: Ensure all other credits and deductions are accounted for.

Submit Your Tax Return: File your return by the deadline using online tax software, through a tax professional, or by mailing a paper return.

Keep Records: Retain all relevant documents for at least six years in case the CRA requests them.

Key Points to Consider

The spousal amount can only be claimed if the marriage or relationship is in good standing.

The spousal amount is the difference between the basic personal amount and the spouse's net income for the year. For example, if the spouse’s net income is $8,000, the spousal amount would be calculated as follows: $15,705 - $8,000 = $7,705 x 15% = CAD $1,155.75, which is the spousal tax credit for the 2024 tax year.

If the non-resident spouse is disabled, the Disability Tax Credit cannot be claimed by the taxpayer.

Non-Resident Dependents

An individual cannot claim other non-resident dependents (such as children, parents, etc.) on their tax return.