Best of: I Should Divorce My Wife?!? (WTF?)
Family Over Blogging
A busy week means most of the posts this week were written on the weekend or are Best of, due to me dealing with Family Health issues, so I give you one of my first posts from 5 years ago, I Should Divorce My Wife ? I enjoyed writing this and it did cause a fair amount of stir even back in my early days.
I Should Divorce My Wife (Tax Wise)?
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:
- Divorce my wife, and pay her half my salary as Alimony (thus sharing my income)
- Have my children live with me, so I might be able to claim the Child Tax Credit and Ontario Tax Credit
- Rent my wife an apartment in the basement of my house (with it’s own entrance).
- 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 SCREWED UP 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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June 30th, 2010 at 9:33 AM
You may wish to “split kids” too in order to split your tax bill further! If you support at least one child each, you can each claim an eligible dependent. If your children are young enough to quallify for the UCCB, the Universal Child Care benefit can be taxed in the kid’s hands (likely no income tax payable).
Don’t forget that you’ll be more likely to be able get GST credits too!
You should do it after you get the family HST cheques if you live in Ontario as two single amounts are less than one family amount.
Isn’t our tax system wonderful?!
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June 30th, 2010 at 9:45 AM
Indeed, I love the ins and outs of the Tax world!
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June 30th, 2010 at 9:11 PM
Yes, Its true, No Canadians should bother getting married. Never claim common law. Just claim single, share accomodations as room mates.
I’ve thought about a divorce as well, But can’t do it, because its just unethical:(, ( not sure why I need feel that way)
It makes economic sense. If the girl wants a wedding, hire an actor for the day LOL.
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June 30th, 2010 at 9:15 PM
Common Law marriages are surprisingly unreliable in terms of tax laws as well (and for Pensions too).
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July 1st, 2010 at 12:55 AM
Thanks for submitting to the Carnival of Rants. I’m including your article in the current edition, but really would appreciate a link back to my website. Thanks.
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July 1st, 2010 at 1:41 AM
“You may wish to “split kids” too in order to split your tax bill further! If you support at least one child each, you can each claim an eligible dependent.”
You would have to live in separate residences, since the ITA specifically says that only one eligible dependant claim per residence. I’ll leave it to you to prove to the judge that your claim is valid.
” If your children are young enough to quallify for the UCCB, the Universal Child Care benefit can be taxed in the kid’s hands (likely no income tax payable).”
Old news. The CCTB is not taxable anyway. And it has been well established (for as long as I can remember) that if the CCTB is invested, the gains are taxable in the kids hands.
UCCB is taxable to the parents but like CCTB, if invested, the gains are taxed in the kids hands.
Anyway, good luck in tax court if you try this “divorce”. I’ve read a few tax court cases in this vein and rarely do they turn out well for the taxpayer(s).
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July 2nd, 2010 at 5:01 AM
[...] Should you divorce your wife? @ Canajun Finance. I can’t afford a divorce with 2 kids and a wife at home shhht don’t tell my [...]
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July 5th, 2010 at 9:21 PM
I had a related post at http://multipleeggbaskets.blogspot.com/2010/07/are-you-looking-for-life-partner.html about a life expectancy calculator from CanadianBusiness.com. Maybe that’s the fuel for a younger woman.
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