Marriage Benefits In Canada & How It Can Help Your Finances (2024)

Are you and your significant other thinking of tying the knot?

Currently, 64.6% of Canadians are married, and if you’re thinking of joining them, then you should definitely give this post a read.

Below, I’ll outline some of the key ways a marriage can help your combined financial interests, what types of marriage benefits in Canada there are, and some important questions you should ask before making a final decision.

Can Marriage Improve Your Financial Health?

While marriage shouldn’t be a purely financial decision, getting married could improve your and your spouse’s overall financial health. This is especially true if you and your spouse have similar financial goals and are willing to work together to build the life you want.

The rewards can be great if you and your spouse can share a budget, combine your income, and invest together.

Some of the key ways that marriage can improve your joint finances include:

  • Ability to claim spousal/marriage tax credits
  • Ability to share income and split living expenses
  • It can make it easier to buy a home
  • You can purchase combined health and dental insurance
  • … and more

That being said, marriage isn’t a decision that should be taken lightly. Just as a marriage can improve your financial health, it can also destroy your finances if things take a turn for the worse.

The financial effects of a divorce, for example, can take years to recover from and can significantly hurt your credit score. While the divorce rate is lower than it’s been in decades, you (and your partner) should be 100% sure before you commit.

8 Ways That Marriage Can Improve Your Finances

Wondering about the financial marriage benefits in Canada? Here’s a look at some of the key ways that getting married can benefit you and your partner’s finances and help you reach your goals faster.

1. Combined Income Under One Roof

1. Combined Income Under One Roof

Keeping up with your own separate bills is a great place to start, but it can also get you trapped in a rat race where you feel like you never have any extra to set aside for yourself.

Combining incomes creates a larger pool of funds for you and your partner can share. This can help with budgeting and long-term financial planning.

Sharing expenses such as housing, utilities, groceries, and transportation reduces the financial burden on each married partner, allowing them to allocate more resources toward their financial goals (not just responsibilities).

Combining finances in marriage can indirectly improve credit scores for both partners too. By combining income, you can effectively help pay off each other’s debts and get your individual accounts in good standing.

As your credit scores increase, both of you will have access to better financial products, lower interest rates, and may receive more favourable borrowing terms.

2. Spousal Tax Credits

2. Spousal Tax Credits

The Spouse or Common-Law Partner Amount tax credit in Canada is a non-refundable tax credit designed to provide tax relief for individuals who financially support their spouse or common-law partner.

This can be particularly helpful if one partner finds themself unemployed or takes time off of work to help raise their child.

This credit for the 2022 tax year is $2,350 and can be claimed if the spouse or partner’s net income is below the annual threshold (annually adjusted to inflation).

If your spouse suffered from a mental or physical disability, you might also be able to claim the Canada caregiver amount, which offers an additional tax credit of up to $7,525, depending on your and your spouse’s income.

3. Combine Health And Dental Benefits

3. Combine Health And Dental Benefits

Canada’s free healthcare doesn’t cover all medical expenses, and it rarely covers dental care. Because of this, many Canadians purchase additional health and dental insurance.

Purchasing insurance as an individual is almost always more expensive than purchasing a family plan with your spouse.

If you have children, you can also add them to your combined family plan. This ensures that your entire family is covered for a lower monthly premium than you’d all pay individually.

4. You Can Contribute To Your Spouse’s RRSP

4. You Can Contribute To Your Spouse’s RRSP

If one spouse earns more money than their counterpart, the higher-earning spouse can contribute to their spouse’s individual RRSP. This can be particularly useful if the higher-earning spouse has already maximized their annual RRSP contribution.

If the lower-earning spouse is unable to maximize their contributions, their spouse can step in and match the difference, as long as each individual account remains within its allowed annual contribution limits.

That being said, there is a three-year attribution rule that applies to spousal RRSP contributions. The money deposited into the spouse’s RRSP account must remain there for at least three calendar years.

If the funds are withdrawn before the three-year term elapses, the withdrawn amount must be claimed as taxable income on the contributor’s tax returns.

5. Ability To Split Pension Income

5. Ability To Split Pension Income

Eligible married couples in Canada can split their pension income with their spouse, which can help them save on taxes in the long run.

You can allocate up to 50% of your eligible pension income to your spouse or common-law partner. The allocated pension income is reported on your partner’s tax return, while the remaining portion is reported on your return.

This can be useful if one spouse has a higher pension income than the other, as pension income counts as taxable income.

6. Ability To Transfer Unused Tax Credits

6. Ability To Transfer Unused Tax Credits

Married couples can transfer certain unused tax credits, such as the age amount, disability amount, or tuition credits, to their spouse to reduce their combined tax liability.

If one partner has already used these tax credits, the remainder of their benefits can be transferred to their spouse.

7. It May Be Easier To Purchase A Home

7. It May Be Easier To Purchase A Home

Buying a home is a major financial decision, and many Canadians wait until they’re married to do so. This is because it’s often easier to get approved for a mortgage when jointly applying as a married couple.

As a married couple, you and your spouse can split the liability for the mortgage, which effectively increases your borrowing power.

Of course, you’ll still need a decent credit score and steady income history. However, applying for a home loan jointly greatly increases your chances of getting approved.

If you and your spouse both work, you’ll also be able to save money for a home down payment quicker than you’d save the same down payment by yourself.

8. Simplified Estate Planning And Inheritance

Consider Estate Planning

Being married simplifies estate planning, as spouses can inherit each other’s assets without incurring probate fees or taxes. Marriage often provides automatic rights to assets, such as jointly-owned property, which can pass directly to the surviving spouse.

Spouses can be named beneficiaries for life insurance amounts, retirement plans, and investment accounts, ensuring a seamless transfer of assets and reducing legal complications.

Important Things To Consider Before Getting Married

As you can see, there are several financial benefits to getting married in Canada. However, there are some important questions that you should ask yourself before making a final decision to get married.

Long-Term Compatibility

When your marriage is in the “honeymoon stage,” which typically lasts for around two years (or less), it’s all too easy to look past your partner’s not-so-great traits, whether they be personal or financial.

Perhaps you look past your partner’s irresponsible spending habits or fail to recognize a character flaw that could create massive arguments in the future.

This could result in financial problems in your marriage in the future, so it’s important to think hard about you and your partner’s long-term compatibility.

Similar Financial Goals

A couple must have similar financial goals to want a lasting marriage. If one partner constantly lives beyond their means while the other tries their best to save for the future, it will cause inevitable conflicts.

Before finalizing the marriage, you and your partner should have a serious discussion about your long-term financial goals, how you plan on budgeting, and how you’ll jointly manage your finances.

Conclusion – Marriage Can Improve Your Finances

The emotional and financial support you and your partner can receive from a committed partnership can contribute to overall better financial decision-making.

Married couples often hold each other accountable, encouraging responsible spending habits and promoting a focus on long-term financial stability.

However, marriage isn’t a decision that should be taken lightly or be made for purely financial reasons. Make sure that you and your partner share similar financial goals and are committed to building a life together. 

Are you and your partner saving for your first home? The First Home Savings Account program could help by allowing you to save money tax-free. Keep on reading to learn more about the FHSA!

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Read about how he quit his 6-figure salary career to travel the world here.

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