Splitting pension income

Preparing for life after work. RRSPs, RRIFs, TFSAs, annuities and meeting future financial and psychological needs.
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D&NBur
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Splitting pension income

Post by D&NBur » 03 Jun 2017 18:38

My husband and I are living on my pension plus both CPP benefits, having retired in 2016. Can we split the income for tax purposes?

twa2w
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Re: Splitting pension income

Post by twa2w » 03 Jun 2017 18:59

Yes. You can split up to 50% of your work pension income with your spouse.

If your CPP payments differ greatly, you can also apply to CPP to have them equalized. Then you will each get the same amount monthly. The equalization will end when one of you passes and the survivor's payment would revert to their normal amount before the equalization.
Ie if you get 200 a month and your spouse gets 800, under equalization you would each get (200+800)/2=500 per month and declare that amount each on tax.

OhGreatGuru
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Re: Splitting pension income

Post by OhGreatGuru » 04 Jun 2017 17:03

It's not quite that simple. They don't actually "equalize" it. You can only split the portion of the CPP earned during the years of marriage. So the percentage spilt will vary with each couple. Just submit the forms and they will calculate it.

izzy
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Re: Splitting pension income

Post by izzy » 05 Jun 2017 08:15

OhGreatGuru wrote:
04 Jun 2017 17:03
It's not quite that simple. They don't actually "equalize" it. You can only split the portion of the CPP earned during the years of marriage. So the percentage spilt will vary with each couple. Just submit the forms and they will calculate it.
It can be even more complicated than that.
For example:
I married my spouse in 1971 and we came to Canada in 1972.CPP started in 1966 and I can drop out some 6 years so I essentially qualify for a full CPP (give or take). ALL my actual contributions were earned whilst we were married but NOT the drop out years .Since she is younger her own drop out is shorter BUT she also has drop out for child rearing.
Not a huge difference after splitting but seems to be a definite one !
"I disagree strongly with what you say, but I will defend to the death your right to say it."

twa2w
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Re: Splitting pension income

Post by twa2w » 05 Jun 2017 12:47

Thanks Izzy and Ohgreatguru for providing the additional info. The CPP website has more complete info and details on the application process. The equalization provision extends to common law as well.

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