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we have lived together from June 28/07 and separated May 25/2010.

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We have written out a...
we have lived together from June 28/07 and separated May 25/2010. We have written out a separation agreement which both of us has signed. I have agreed to pay spousal support of $ 2000.00 monthly for 30 months and a lump sum of $ 5000.00. It is uncontested. What do we need to do to get it approved by Newmarket court, and do we need to do anything else. The document is very short ( less than one page) , and does not contain a financial statement. Neither of us wants to go through the expense of lawyers . There are no children involved, although we both have older children from a previous marriage. We have no biological children together. I need the agreement signed by Newmarket court for tax purposes on the spousal. What can I do to make this happen
Submitted: 8 years ago.Category: Canada Law
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Answered in 1 hour by:
6/21/2010
Lawyer: Tom B., Barrister & Solicitor replied 8 years ago
Tom B.
Tom B., Barrister & Solicitor
Category: Canada Law
Satisfied Customers: 2,415
Experience: 25 years in practice
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I assume you are in Ontario?
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Customer reply replied 8 years ago
yes, in thornhill, which is a northern suburb of toronto. We use the York region court , not the City of Toronto court.
Lawyer: Tom B., Barrister & Solicitor replied 8 years ago
I am a BC lawyer where "common law" means two years together not three.

In any event, people are allowed to settle their differences in contract as you have done. In most jurisdictions, all you have to do is supply an original and a couple of copies of the agreement to the court registry and the agreement gets stamped as entered. It is then a family file capable of enforcement but not tabled for a court appearance if at all necessary.

No one here can review what you wrote and give personal advice.

But, my concern is that you may be stuck with your written promise without the tax benefit. Generally, spousal support is tax deducable for the payor and the recipient pays tax on it. But, on your facts, you admit that it was not really a common law claim for support in the first place. So, maybe she did get legal advice.

If I was advising her, and she was just shy of the minimum time for making a claim at all, I would advise to accept any offer in writing that would satisfy.

Any settlement can be lodged at court but neither of you can agree to be common law spouses when you are legally not. That means you may have settled between yourselves but that you may not have any tax relief if the government comes checking on your tax.

You made the deal and did so in writing apparently. Whether any of it is tax deducable to you should be discussed with a tax lawyer or at least an accountant. My worry is that you settled with no possible claim against you for spousal support and that such a deduction may be disallowed. If your ex refutes the spousal income on her taxes, it will become an issue.

You need better legal (accounting) advice than is possible here. It is a tax law question that really needs the attention of a professional in that area. Tax law changes on a dime and I would trust no one unless they practice all the time.

You may have settled too soon.

If I can assist further, I am here.

Tom

Tom









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Customer reply replied 8 years ago
She has signed the agreement but I have not signed it yet. What if I waited until after the official date of June 28th , which is the 3 year date which would make us common law in Ontario. I could redraft it and date it for July 1, for example, and get her to re-sign with that date on it. I have not provided her with a copy, and I have the one that she signed.Also, it specifically states that the $ 2000.00 monthly payment for 30 months is for spousal support. Would that work?
Lawyer: Tom B., Barrister & Solicitor replied 8 years ago
The document is just supposed to reflect the reality. It is the three years of living as spouses which is the test. I doubt that will work but that is a question for an accountant. I can't advise to alter the reality on paper.

If you have not signed it yet then there is no formal agreement yet. The other option is to go back to her after speaking to an accountant and suggest a lower payment. She will not have to pay tax on these payments if you cannot get the deduction so she may be open to a reduction. Obviously, her tax liability will be smaller than the deductions you could have received but that is one way of somewhat reducing your expense.
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Customer reply replied 8 years ago
I just read a document from CRA that says that common law is assumed after 12 months. It is from a CRA guideline on support payments outlining the fact that common law is 12 consecutive months of cohabitation. My accountant sent it to me and comes directly from CRA. It includes a form T1158, and I will try to forward it to you tomorrow. Is the fact that she will be living here under my support and paying all the bills until mid July make a difference?
Lawyer: Tom B., Barrister & Solicitor replied 8 years ago
As I understand it, the CRA does consider people common law at an earlier stage but whether that gets you the tax deduction is for your accountant. However, if you are still living together and are just planning to live separately, use the date of actual separation. That solves the matter either way.
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Customer reply replied 8 years ago
She has found other accommodations, and her move date is around July 7 - July 11, so that would put us past the 3 year mark. Would that solve the problem?
Lawyer: Tom B., Barrister & Solicitor replied 8 years ago
I really do not see how a court would care if you were still living together but not intimate any longer. That is not their function to inquire. So, my opinion is that this is fine.

Please understand that lawyers seldom agree on anything and a judge is the one who decides which lawyer is wrong. But, the three year rule is for the purposes of the family statute regarding spousal rights and responsibilities and not for the purposes of the CRA. Indeed tax is federal and supersedes provincial law in that jurisdiction. Where I am, in BC, common law is 2 years. But, we have the same tax structure and I do not think the CRA listens to each province.

On your facts, I think you are fine either way. But, I do not give tax advice even to my clients. I will highlight the potential tax issues but I always suggest they talk to an accountant. My legal opinion is that you will have lived together for three years and are spouses in Ontario. I do know that the CRA needs a written agreement or a court order for tax deductibility.

On the new information that you are still cohabiting, I think you can convince a court if necessary that you are spouses. The CRA will consider you common law earlier as you know. But, I cannot know how both of you filed your taxes over the duration of the relationship. If you both filed as single, CRA may question. Perhaps you will have to file amended returns for the past three years. I cannot advise on these points.

My legal opinion is that two people who live together for three years are common law spouses for the purposes of family law even if they foresee a break up. A written agreement for spousal support in these circumstances ought be accepted by the CRA. However, you need a tax adviser to look at the CRA notices and to review how you have both reported income in the past. This is an accountant or a tax lawyer.

Having said that, you can get a very inexpensive personal interview with a family lawyer in your area. Below is a link to the Lawyer Referral Service. They will give you some names of lawyers who will meet with you for little or no fee. Take your ``agreement`` with you.

Just do not take tax advice from a family lawyer like myself. Only consult an accountant or a tax lawyer.

http://www.lsuc.on.ca/public/a/faqs---lawyer-referral-service/

Tom



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Customer reply replied 8 years ago
I have already met with a family law lawyer who ran the divorcemate software. We ran 6 different sets of figures ( low to high ) on 2 separate incomes ( I had a one time capital gain in 2009, but a large capital loss in 2008 which offsets each other - so we ran the numbers with the capital gain averaged over 3 years and with the capital gain included but not the capital loss). The software came up with numbers at less than half to about half of what I offfered her - I was specific in saying that I want her to get her feet on the ground and going, and keep it as amicable as possible). So my question now is what do you think about the do - it yourself packages that you can get that have all the forms , etc, for all these types of situations, that you purchase from legal firms that are " hated " by other lawyers, but are supposed to be legal documents that are acceptable. We are, at this point , amicable , it is just the question of spousal acceptibility that is in question. My accountant is going to get a " quick and dirty " from a tax lawyer that he shares an office with later today. My other question is, that once she moves out, I would assume that not everything will be finalized other than this " preliminary agreement " , which I am sure will be tweaked. I also believe that we will both have to do financial statements to accompany the agreement. Is that how you understand it?
Lawyer: Tom B., Barrister & Solicitor replied 8 years ago
No financial statements are necessary with an agreement in place. This is not a divorce with property issues. The only issue between you seems whether or not you have a tax benefit.

Self Counsel Press is a good publisher for forms and general advice. It costs more than the lawyer referral service though. Maybe do both.

You need the advice of an accountant. CRA has to accept the agreement or you should discount the payment.

I have divorcemate as well but it is not an accountant. It offers a range that is not law and only an argument for a court. That is all it does. You need to know what CRA wants from you and that is for an accountant.
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