The person who actually received the pension income may deduct up to 50% when determining his/her net income. The deducted amount is included in computing the net income of the receiving spouse or common-law partner. Both partners must elect to split pension income when they file their tax returns by completing the Form T1032, Joint Election to Split Pension Income.

No. Withdrawals from RRSPs are not eligible for the pension income credit and therefore, cannot be split. Convert some or all of the RRSP into a RRIF or an annuity. Withdrawals/income from them could be income split with your spouse/partner.

No. Only the age of the account holder matters, not the age of the spouse/partner.

Canada Revenue Agency’s attribution rule effectively says that the person who earned the money or acquired the asset cannot transfer the tax burden to his/her spouse/partner, even if the legal ownership is transferred. In other words, if you put your spouse/partner’s name on rental properties, term deposits or shares purchased with your income, you still have to pay tax on the resulting investment income and any capital gains. The income is attributed back to you for taxation purposes.

A deemed disposition at fair market value (FMV) occurs on the day of transfer.

  • If there is a capital gain: the gain is taxable even though you haven’t sold the asset.
  • If the asset is in a capital loss position: the loss will be denied, unless the asset is sold and not repurchased within 30 days:
    • This is called the superficial loss rule.

Book value is the combined total of your initial purchase price, any distributions that were reinvested, and costs incurred to buy or sell the investment. Market value is what your investment is worth today.