{"id":35959,"date":"2025-07-21T09:18:26","date_gmt":"2025-07-21T13:18:26","guid":{"rendered":"https:\/\/www.millerthomson.com\/?p=35959"},"modified":"2025-07-22T17:14:32","modified_gmt":"2025-07-22T21:14:32","slug":"until-death-do-us-part-am-i-responsible-for-my-partners-tax-bill","status":"publish","type":"post","link":"https:\/\/www.millerthomson.com\/en\/insights\/private-client\/until-death-do-us-part-am-i-responsible-for-my-partners-tax-bill\/","title":{"rendered":"\u201cUntil death do us part\u201d: Am I responsible for my partner\u2019s tax bill?"},"content":{"rendered":"\n

Imagine learning, after your spouse\u2019s passing, that the Canada Revenue Agency is coming after you, for your spouse\u2019s tax debt. \u201cUntil death do us part\u201d may have been a vow of love, but in the eyes of the tax authorities, the financial bond can linger well beyond the grave. If you receive assets from a deceased spouse who owed taxes, are you on the hook?<\/p>\n\n\n\n

A recent Federal Court of Appeal decision highlights the importance of a direct beneficiary designation to protect retirement savings against estate claims, including unpaid taxes.<\/p>\n\n\n\n

When are you considered a spouse – And why it matters for taxes<\/h2>\n\n\n\n

Marriage is an important milestone in cultures around the world.  The status of husband or wife also gives rise to legal rights and obligations.  Some \u2013 but not all \u2013 Canadian jurisdictions grant common-law partners similar rights and obligations to those of married persons. What legally constitutes a common-law relationship differs across Canada, and can be quite subjective, leading to uncertainty in some cases. Determining whether a person is married or not, and therefore whether they are a legal \u201cspouse\u201d is usually more clear.<\/p>\n\n\n\n

Recently, in Enns v Canada, <\/em>2025 FCA 14 (\u201cEnns<\/em><\/strong>\u201d), the definition of spouse came under scrutiny, specifically with reference to whether a surviving partner was still considered a \u201cspouse\u201d after death, for the purposes of the Income Tax Act<\/em> (the \u201cITA<\/strong>\u201d).<\/p>\n\n\n\n

Can you inherit a tax bill? Understanding section 160 of the ITA<\/h2>\n\n\n\n

Each individual in Canada is a separate taxpayer who is responsible for payment of their own tax liability.  Spouses and common-law partners are not automatically liable to pay their partners\u2019 tax.  However, section 160 of the ITA permits the collection of unpaid tax from persons other than the primary taxpayer.<\/p>\n\n\n\n

Specifically, paragraph 160(1)(a) of the ITA stipulates that, where a person transfers property to their spouse or common-law partner for less than fair market value (e.g. a gift), at a time when the person is liable for unpaid tax, the Minister of National Revenue (the \u201cMinister<\/strong>\u201d) can assess the receiving spouse or common-law partner for the unpaid tax, up to the value of the gift.  This prevents a tax debtor from giving property to their spouse to avoid the payment of tax.  Similar rules apply for transfers of property to minors and persons with whom the tax debtor does not deal at arm\u2019s length.<\/p>\n\n\n\n

Case study: Enns – <\/em>Is a spouse still a \u201cspouse\u201d after death?<\/h2>\n\n\n\n

The deceased passed away in 2013, leaving behind a Registered Retirement Savings Account (\u201cRRSP<\/strong>\u201d) worth $102,789.52. Unfortunately, he died owing taxes in excess of this amount. The deceased\u2019s wife was the designated beneficiary of the RRSP, and received the funds directly from the RRSP account following her husband\u2019s death.<\/p>\n\n\n\n

The Minister assessed the deceased\u2019s wife to recover the entire value of the RRSP. She argued that as he was deceased, she was no longer the deceased\u2019s spouse, and therefore, the Minister could not pursue her for his tax debt.<\/p>\n\n\n\n

The Tax Court considered two previous cases which reached opposite conclusions as to whether a person ceased to be a spouse upon the death of their wife or husband: Kiperchuk v The Queen<\/em>, 2013 TCC 60<\/a>, and Kuchta v The Queen,<\/em> 2015 TCC 289<\/a>.<\/p>\n\n\n\n