Canadian Personal Finance Blog

Personal Finances and Consumer Concerns, essays, stories, examples and how to articles with a distinctly Canadian Point of View
July 22nd, 2008

Best of: I should Divorce My Wife?

I have been cleaning up my directories and looking over the 900+ postings I have been doing over these past few years and I came across this gem, I Should Divorce My Wife? which points out how strangely set up the tax system is. The concept is purely a “what if” scenario.

I should divorce my wife?

I read that one on the Alan Baggett news site, and scratched my head but it is actually how the tax system is set up currently. If I divorce my wife and pay her Alimony (not child support, remember that case a while back, where that is taxed in the payers hands) I can effectively split my income.

I remember having this argument that in the Government’s eyes the following scenario would be ideal:

  1. Divorce my wife, and pay her half my salary as Alimony (thus sharing my income)
  2. Have my children live with me, so I might be able to claim the Child Tax Credit and Ontario Tax Credit
  3. Rent my wife an apartment in the basement of my house (with it’s own entrance).
  4. Have my wife take care of the kids (as daycare) and write off the money I pay her on my income as well (and she does it in my home, so I write that off too).

OK, ok, this is a ridiculous scenario (and I’m sure some might even claim illegal, although I’d love to see that taken to court), but this is how messed up {sic} the entire Canadian Tax System is! I checked this with Quicktax and it was quite happy to show me the obscene amount of tax I’d save.

Alan’s tax bible is an interesting read, as are his stories (they are a little “he said, she said” which at times I am not fond of), but still interesting to read how some people are persecuted by the Tax system, while others get off “scott free”.

Please let me repeat, I do not condone the above tax sharing concept (but if you get away with it drop me a line, I’d be curious to hear).

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This entry was posted on Tuesday, July 22nd, 2008 at 5:19 AM and is filed under Income Tax, Single Income. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

5 Responses to “Best of: I should Divorce My Wife?”

  1. This and That # 102 Says:
    July 24th, 2008 at 9:27 PM

    [...] Canadian Financial Stuff has a crazy idea for splitting income with his spouse. [...]

  2. R I Says:
    July 29th, 2008 at 3:22 PM

    If you rent your basement out to your wife, aren’t you just attributing money back to yourself? I’m not sure what that step adds (or is it just a way of keeping her close?)

  3. bigcajunman Says:
    July 29th, 2008 at 3:53 PM

    Not if it has a separate entrance and it is zoned as a rental property :-) Maybe not but it sounds good.

  4. 37th Carnival of Money Hacks: Wonders of the World Says:
    November 5th, 2008 at 8:11 AM

    [...] Cajun Man humorously asks if I should Divorce My Wife? posted at Canadian Personal Finance Blog. I know a ton of unmarried couples without children [...]

  5. cribcat Says:
    November 13th, 2008 at 10:24 AM

    Don’t get maried and don’t have kids. Love is only in the mind anyway.

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