Should We File with Pride? A Queer History of Tax Law in Canada

When speaking of LGBTQ+ rights, most tend to conjure up parades, protests, or maybe the victories of marriage equality. Rarely, if ever, do they think of the tax return. And yet, there it sits, year after year, line after line, our nation’s most persistent civic ritual. In a country where taxes touch nearly every aspect of life, it is no exaggeration to say that the tax system tells a story about who belongs, and on what terms.

Tax law, in its quiet, bureaucratic way, has long been a mirror of social values. It recognizes relationships, rewards some family structures, and withholds benefits from others. For much of its history, the Canadian Income Tax Act[1] offered its benefits with a wink and a nod to one kind of household: the heterosexual, married couple, ideally with children and a mortgage.

But over the decades the tax system opened its ledgers to LGBTQ+ Canadians. This is the story of how that happened.

From the Nuclear Norm to Nonmarital Nuance

When Canada introduced its income tax in 1917, the taxable unit was, and remains, the individual. But individuals do not live in a vacuum. From the very beginning, tax rules bent toward recognizing families: to stop income-splitting among spouses, to offer child credits, or to smooth the financial bumps of domestic life. Naturally, those “families” were presumed to be heterosexual and married.

That began to change in the 1970s, not because of queer activism, but because straight people started leaving their marriages.

As marriage rates declined and cohabitation rates rose, provinces like British Columbia (in 1972) and Ontario (in 1978) extended spousal support obligations to unmarried heterosexual couples. Legislatures began revising the definition of “spouse.” By 1993, the Act recognized opposite-sex partners who had lived together in a conjugal relationship for over a year (or shared a child) as spouses for tax purposes.

But not same-sex couples. Not yet.

From Exclusion to Inclusion (Sort Of)

In the 1990s, lesbian and gay Canadians faced a string of legal defeats as they sought recognition of their relationships.

In Canada (Attorney General) v Mossop (1993)[2], the Supreme Court refused to recognize a gay man’s right to bereavement leave following the death of his partner’s father. Because “sexual orientation” was not explicitly listed in the Canadian Human Rights Act[3], the court found no discrimination.

A year later, Ontario’s New Democratic Party government introduced Bill 167, which aimed to extend the definition of “spouse” in provincial legislation to include same-sex couples. It was narrowly defeated in a free vote, 68 to 59, illustrating the political resistance still facing legal reform.

in Rosenberg v Canada (AG)[4], where two CUPE employees sued after the Canada Revenue Agency (“CRA”) threatened deregistration of their union’s pension plan for recognizing same-sex partners. The Ontario Court of Appeal sided with the employees and ordered the term “spouse” in subsection 252(4) of the Act to be read as inclusive of same-sex couples, at least for pension purposes. The federal government, notably, did not appeal. A broader legislative shift was in sight.

In 1999, the Supreme Court of Canada in M. v. H.[5], ruled that excluding same-sex couples from spousal rights violated the Canadian Charter of Rights and Freedoms.

The federal government responded with the Modernization of Benefits and Obligations Act[6] in 2000. It amended the Income Tax Act, to recognize same-sex couples who had lived together in a conjugal relationship for at least a year. In place of “opposite-sex common-law spouse,” the law introduced a new, proudly neutral term: “common-law partner.”

It was not quite equality. Married same-sex couples still didn’t exist in law but, for the first time, queer Canadians could be seen on line 30300 of their tax return.

From Charter to Ceremony

Between 2003 and 2005, same-sex marriage was legalized province by province through Charter challenges. In 2005, Parliament passed the Civil Marriage Act[7], extending to same-sex couples nationwide the right to marry. Further amendments to the Act were made to theoretically provide full equality for married same-sex spouses: access to pension splitting, spousal RRSPs, rollover provisions for capital property, and the entire suite of marital tax benefits. But equality in theory can differ from equality in practice.

From Recognition to Considerations

Claire Young’s critique in Taxing Times[8] warned that merely extending spousal status to same-sex couples risked reinforcing the regressive and gendered aspects of Canada’s tax system. Two decades later, in “Taxing Times for Lesbians and Gay Men Twenty Years Later”[9], she revisited that argument and found her concerns not only valid but intensified.

The Canadian tax system, she observed, privileges couples with unequal incomes, largely through the spousal amount, RRSP strategies, and benefit clawbacks. Low-income couples may lose out by being treated as a unit for programs like the GST credit or the Canada Child Benefit. These provisions assume shared finances and domestic interdependence, which often do not reflect modern queer households. They also favour households with stay-at-home partners, reinforcing unpaid domestic labour while offering little relief to dual-earner couples who outsource caregiving.

Young also raised the issue of privacy. Identifying a “common-law partner” on a tax return effectively outs queer individuals to the CRA, even if they are not “out” in any other aspect of their lives. Under subsection 239(1)(a) of the Act, misrepresentation is an offence, meaning that there is no legal option to withhold that information. Subsection 241(4) of the Act compounds the risk by allowing the CRA to share tax information with various public entities. For those who also seek workplace-related benefits, being outed to employers becomes a further risk, one that can expose them to discrimination or harassment.

Young’s 2014 article highlighted the trade-offs of legal recognition, showing how tax rules that appear even-handed can carry hidden costs. That lens remains relevant today, as blind spots continue to surface in seemingly neutral legislation.

From 2014 to the Present

While legislative developments around same-sex marriage has stabilized since 2005, the past decade has seen meaningful changes elsewhere. In particular, the tax treatment of third-party reproduction, an option especially relevant for LGBTQ+ Canadians. Furthermore, the way tax data is collected and analyzed has evolved, offering new insights into how identity and income interact across Canada’s fiscal landscape.

McNeilly v. Canada

In McNeilly v. Canada[10],  the Tax Court of Canada dismissed a Charter challenge by a gay single father denied the medical expense tax credit (“METC”) for surrogacy-related costs incurred in 2015. At the time, paragraph 118.2(2)(a) read together with subsection 118(6) of the Act, limited eligible expenses to those incurred for the taxpayer, their spouse, or a dependent – excluding third-party surrogates and donors. The Appellant argued that this exclusion had a disproportionate impact on LGBTQ+ Canadians, for whom third-party reproduction is often essential, and that denying him the credit perpetuated the stereotype that gay men are not natural parents. The Court disagreed, finding no unequal treatment under section 15 of the Charter, as the rule applied universally.

In 2017, Parliament enacted subsection 118.2(2.2), allowing fertility expenses for patients with a medical condition even on a retroactive basis, but still excluding the Appellant, who was not infertile. Then, in 2022, following his advocacy with senior government policy advisers, Parliament introduced paragraph 118.2(2)(v) and subsection118.2(2.21) to the Act, finally extending the METC to certain surrogacy and donor-related costs incurred in Canada, though only on a prospective basis. The Appellant’s legal claim failed, but his story may have helped change the law. The case illustrates how even neutral tax provisions may have unforeseen consequences on queer families.

Gender-based Analysis Plus (GBA Plus) Report

In 2025, the Department of Finance released Part 8 of its Report on Federal Tax Expenditures – Concepts, Estimates and Evaluations, the first federal study to analyze how tax expenditures impact identity groups, including transgender and non-binary Canadians. Conducted under the framework of GBA Plus, the report used linked tax return and census data to explore how tax policy affects Canadians based on gender, income, and other intersecting identity factors.

The study found that although transgender and non-binary individuals represented only 0.27% of tax filers, they reported just 0.19% of total pre-tax income. The personal income tax system helped narrow that gap: progressive rates and non-refundable credits raised their share of after-tax income by 3 per cent, reducing the earnings gap with cisgender men by approximately $5,400. Measures such as the Canada Workers Benefit, the Refundable Medical Expense Supplement, and tuition-related credits played a redistributive role.

Still, the report cautioned that incomplete data and age-skewed self-identification trends limit long-term evaluation. And while aggregate figures show modest equity gains, they do not capture individual cases, like the Appellant in McNeilly, where access to benefits is hindered by narrow definitions or assumptions embedded in legislation.

Should We File with Pride?

The tax return still sits there, year after year, line after line, just as bureaucratic, just as quiet. But now, the categories that once did not fit the form are stretched to make space.

That space matters. Recognition matters. For many queer Canadians, the ability to name a partner, to share a return, to see themselves reflected, however faintly, in the coded language of the tax system carries a weight that goes beyond numbers.

Yet inclusion is not a cure-all. It can demand visibility. It can reinforce dependency. It may privilege some relationships while taxing others. And even when laws change, the path to reform is often reactive, leaving gaps unaddressed until harm is already done.

So, should we file with pride?

Perhaps, but with the awareness that every checkbox, every category, and every conjugal assumption still tells a story: one that may include, overlook, or misunderstand queer lives.

[1] R.S.C., 1985, c. 1 (5th Supp.) as amended (the “Act”).

[2] [1993] 1 S.C.R. 554.

[3] R.S.C., 1985, c. H-6.

[4] (1998), 108 O.A.C. 338 (CA).

[5] [1999] 2 SCR 3.

[6] S.C. 2000, c. 12.

[7] S.C. 2005, c. 33.

[8] Young, C. FL. (1994). Taxing Times for Lesbians and Gay Men: Equality at What Cost? Dalhousie Law Journal, (2.0).

[9] Young, C. F. L. (2014). Taxing Times for Lesbians and Gay Men: Twenty Years Later. In After Legal Equality: Family, Sex, Kinship (pp. 134-149). Taylor and Francis Inc..

[10] 2024 TCC 162.