Date of Marriage Property Deduction in Ontario Equalization

If you owned a house, savings or a business before you married, you may wonder whether your spouse can claim half of it on separation. Ontario's equalization rules give some credit for what you brought into the marriage, but not for everything.

This article explains how the date-of-marriage deduction works for married spouses, the important exception for a family home, and the records that help you prove your claim.

Where the deduction fits in

On divorce, nullity or separation with no reasonable prospect of resuming cohabitation, the spouse with the lower net family property is entitled to one-half of the difference between the two amounts.

Net family property is the value of all property a spouse owns on the valuation date, except excluded property. From that you deduct the spouse's debts and other liabilities, and the net value of property, other than a matrimonial home, that the spouse owned on the date of marriage. That second deduction is the date-of-marriage deduction. It is meant to recognize that wealth you already had should not be treated as built up during the marriage.

How it works in practice

The deduction is based on the net value of what you owned on the date of marriage. In plain terms, that means what your assets were worth then, less what you owed then. Property is defined broadly, covering present or future, vested or contingent interests in real or personal property, and it includes shares in a business or company.

If a spouse's net family property comes to less than zero, it is deemed to be zero. This means one spouse's debts cannot create a negative number that increases what the other spouse owes.

• Assets you owned at marriage, such as savings, investments, a vehicle or business shares, can generally be deducted at their value on that date.
• Debts you owed at marriage reduce the amount of that deduction, because it is the net value that counts.
• Those same assets are still counted at their value on the valuation date, so the deduction offsets their starting value rather than removing them from the calculation.

The big exception: a pre-marriage home

No date-of-marriage deduction is allowed for a property that is a matrimonial home, and debts tied directly to buying or significantly improving a matrimonial home are not netted against the date-of-marriage deduction. Ontario.ca explains that the family home's full value is shared even if one spouse owned it before the marriage.

A matrimonial home is any property in which a spouse has an interest and that is or was ordinarily occupied by the spouses as their family residence, judged at the time of separation if they have separated. A couple can have more than one. Whether a cottage or rental qualifies depends on the facts, so it helps to get advice on your property.

Proving what you owned

The spouse claiming a deduction or exclusion has the onus of proving it. In an equalization application, each party must serve and file a sworn statement of property, debts and other liabilities that covers the date of marriage, the valuation date and the date of the statement, together with claimed deductions.

For property claims, a financial statement is served and filed with the claim, and Form 13.1 is the form for property claims. If you later discover that a served document is incorrect, you must promptly serve the corrected information. If a required disclosure document is missing, the court may order it produced and must then also order the party to pay costs.

What to do next

Gather proof of your position on the wedding date, because records from years ago can be hard to find. Do this early, since supporting documents are due within 30 days after the financial statement is due.

• Bank, investment and retirement statements closest to the date of marriage.
• Mortgage statements, property tax bills or appraisals from around that time.
• Business records or share certificates showing what you owned.
• Loan, credit card and line of credit balances on the date of marriage.
• Your marriage certificate, to confirm the date.

If you were not married, these rules do not apply. Equalization covers only a defined spouse, and that does not include unmarried cohabitants. Common-law partners are generally not required to split property, and it belongs to whoever bought it, although a partner who contributed may have a claim. Valuing a business or property is a separate step, and a lawyer can explain how that is usually done.

Frequently asked questions