By Colin White, March 27, 2019
Canada Pension Plan
CPP is eligible to be shared but not split. I know that sounds odd, but here is the difference. You can apply to share your CPP with your spouse and once approved, the pension amounts will be adjusted and paid out accordingly. The amount that is shared is pre-determined based on the number of years you and your spouse have lived together.
Although spousal RRSPs were much more popular before changes to the Income Tax Act in 2007, many people still have these accounts. The theory was that the higher income spouse could contribute to an RRSP in the name of the lower-income earner. Once two full calendar years have passed from the last contribution, withdrawals are taxed in the hands of the account holder. This is not something that can be done when filing your tax return, as it must be withdrawn from the proper account.
These are just a few points on income splitting you might consider when filing your taxes. If you have any specific questions, consult a qualified tax specialist to ensure you only pay the tax you are required to pay.This article is a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.