Life Changes? Don't Forget the CRA: The Importance of Updating Your Marital Status Promptly (Part 1)

Did you recently say "I do," move in with a common-law partner, or perhaps go through a separation? These major life events aren't just personal milestones; they have significant implications for your tax and benefit situation with the Canada Revenue Agency (CRA). Many people mistakenly believe they only need to update their marital status when they file their annual tax return, but that's a common oversight that can lead to financial headaches.

The Golden Rule: Act Fast! The CRA's directive is clear: you must inform them about a change in your marital status by the end of the month following the change. Forgetting or delaying this step can have direct consequences on your government benefits and credits.

Why the Rush? It's All About Your Family Net Income! Benefits like the Canada Child Benefit (CCB), the Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit, and others are calculated based on your "adjusted family net income." When your marital status changes, so does this crucial income figure.

If you don't update the CRA in a timely manner:

• Overpayments: You might continue to receive benefit amounts you're no longer entitled to, which the CRA will eventually ask you to pay back.

• Underpayments: Conversely, you could miss out on increased benefits you are now eligible for.

• Payment Interruptions: Your current benefit payments could be stopped or adjusted without warning, impacting your household budget.

The recalculations and adjustments to your benefits typically begin in the month after your marital status change occurred. Don't let a life event turn into a tax problem. Make updating your CRA file a top priority to ensure smooth benefit flow and avoid unexpected demands for repayment.

Source: https://www.canada.ca/en/revenue-agency/services/child-family-benefits/update-your-marital-status-canada-revenue-agency.html