BrianDell said:
There are multiple reports, on this forum alone, of commentators being advised by their accountants to file as single. May I ask what your credentials are such that you are in a position to definitively declare that these professionals advised their clients to commit "tax fraud and misrepresentation", Rob? I'll add that in one of these reports, "Revenue Canada told me to send a letter updating marital status" the very thing I suggested and you deem to be an unacceptable "separate correspondence".
I was told to always file as per your actual marital status by my friend who works at the CRA audit department (for businesses though, not personal taxes), and by another who is an accountant.
Call it what you want, but if you are married and you file as single, you are misrepresenting your marital status whether or not you are benefiting from it. Yes in vast majority of cases a simple re-assessment will suffice to make the change, but it doesn't dismiss the fact that the initial taxes were done incorrectly.
filing single when there was no tax advantage in doing so.
Problem is, the CRA doesn't always know if there's an advantage until after they have done an audit. In majority of fraud cases, someone would continue filing as single despite being married or common-law, in order to retain benefits they are getting as single that they would not be eligible for when family income is taken into account. In going after the actual frauds, some people who have made innocent errors (such as not realizing common-law filing was mandatory) are caught in the net also. In the end yes since there was no advantage or harmful intent there may be no consequences, however just the hassle of everything is something that would be better avoided to begin with.
It doesn't make any sense from a policy perspective, while what we DO have is multiple reports of the government conducting mini-audits of those false SIN numbers by asking for explanations and/or additional documentation like a world income statement for the non-resident spouse. You may call that "no issue" but I don't agree. In fact I haven't seen a report where the government did NOT ask for either a true SIN number OR a world income statement.
Yes that's common practice from what I've seen. Once you change your marital status and indicate no SIN or a 000 SIN, CRA will send out a request for spouse world income as standard practice. This is usually only for the purposes of calculating new family income for the Canadian filing their taxes, not for taxable purposes on the spouse's non-resident income.
From a policy perspective, CRA generally just cares about a spouse's income from the date he or she became tax resident, which in the overwhelming majority of cases will be when he or she became a PR. An exception here is for physically non-resident spouses living in the few countries Canada doesn't have a tax treaty with as there is a possibility that gaining a spouse in Canada would tip the scale assessing ties to Canada towards CRA concluding the spouse is tax resident in Canada. In these particularly rare cases, the income of the physically non-resident spouse would be taxable in Canada.
Also they would care in the case a Canadian is receiving benefits according to their single income, but once the Canadian gets married to a non-resident the non-resident's world income is then used to determine the Canadian's family income, and what benefits they are now entitled to.
Yes, and in my view a return with a false SIN is neither "normal" nor accurate.
In my view I would go by what the actual tax programs certified by the CRA recommend, which seems to be using the 000 numbers for dependents/spouses with no SIN.
Look at the "who can apply" part of the application for a ITN number form and none of those conditions apply here.
That is not an absolute list, it is just showing a few possible examples that "could occur". If you notice, it states :
Who can apply
You can apply if you do not have, and are not eligible to obtain, a SIN
but you need to provide an individual tax number to the CRA. For
example, this could occur if you are:
A non-resident spouse could obtain an ITN if they wanted to, but there is really no point considering using 000 for dependents and indicating world income seems to be generally accepted by CRA.
Not claiming to be married as far as taxes are concerned is the most straightforward way of "not doing that." The "tax fraud and misrepresentation" stuff is simply not true. Misrepresentation is a legal term of art as opposed to just whatever you say it is, and in contract law it includes a party suffering damages as a result. Worst case scenario here is being re-assessed and having to pay back the benefits for claiming to be single, benefits that I, for one, am not aware of.
The most straightforward way to me is filing as married if you are married. And as I said above, if you print off your return and send it by mail you don't need to use the 000 SIN, you can write in pen in that section that spouse is non-resident and doesn't have a SIN. When CRA reviews your return, they will see your married status, and that partner has no SIN, and will be doing everything the proper way.
I'm sure you are right that in majority of cases filing as single will turn out to be fine as long as the intent is not to benefit financially from it. However I've heard stories of how people are selected for audit, and sometimes it's very simple inaccuracies like this in a tax return that flag someone. So to be very safe I will always recommend people that are married or common-law, simply change their status with CRA and file as married or common-law no matter if it has no effect on their actual return amount. Of course in the end it may just be a difference of opinion, but for me I trust the advice given to me by those in the industry.
