When filing taxes in Canada, if your spouse has not fully utilized their personal tax exemption (Basic Personal Amount), the other partner can claim the unused portion to reduce their tax burden. Here’s a clear guide on how spousal tax exemptions work and how to apply them:
Basic Personal Amount
Every Canadian tax resident is entitled to a Basic Personal Amount each year. For 2024, the amounts are as follows:
- For income below C$15,074, the Basic Personal Amount is C$15,705.
- For income between C$15,074 and C$214,368, the Basic Personal Amount gradually decreases from C$15,705.
- For income over C$214,368, the Basic Personal Amount is C$12,298.
Spouse or Common-law Partner Amount
The higher-earning spouse can claim the unused portion of the Basic Personal Amount from the lower-earning or non-earning spouse when filing taxes.
Example:
- Suppose Person A’s Basic Personal Amount for 2024 is C$15,705, and their spouse’s net income is C$7,705.
- Person A can claim: C$15,705 – C$7,705 = C$8,000.
How to Apply
- When using tax software or filing taxes online, provide your spouse’s net income information, and the system will automatically calculate the amount you can claim.
- Ensure all information is accurate to avoid adjustments by the Canada Revenue Agency (CRA).
Key Notes
- Consistency of Information
- If your spouse’s reported net income on their CRA T1 tax return differs from the information you provided, the CRA will adjust your spousal tax claim accordingly.
- To avoid discrepancies or penalties due to underpaid taxes, it is recommended that both spouses file their taxes together for accuracy.
- Unused Amounts Cannot Be Carried Forward
- If the unused Basic Personal Amount exceeds what you can claim, the remaining portion cannot be carried forward to future years or result in a refund.
- Tax Residency Requirement
- Both spouses or common-law partners must be Canadian tax residents to claim the spousal amount.
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