What is pension income splitting?
A tax payer can be able to elect jointly with his/her spouse or common-law partner to split eligible pension income as long as meet all the requirements. It can save you a lot of taxes if calculated properly.
- – the taxable part of life annuity payments from a superannuation or pension fund or plan
- – if they are received as a result of the death of a spouse or common-law partner, or if the transferring spouse or common-law partner is 65 years of age or older at the end of the year:
- – annuity and registered retirement income fund (including life income fund) payments
- – registered retirement savings plan (RRSP) annuity payments
- – certain qualifying amounts distributed from a retirement compensation arrangement
Not Eligible pension:
- – old age security payments
- – Canada Pension Plan, Quebec Pension Plan
- – any foreign source pension income that is tax-free in Canada because of a tax treaty income
- – income from a United States individual retirement account (IRA)
- -amounts from a RRIF included on line 115 and transferred to an RRSP, another RRIF or an annuity
- – You are married or in common-law partner
- – You were both residents of Canada on Dec 31 of the year
- – You received qualified pension income