income splitting
Loopholes Tagged "income splitting"
Plain-English guides to Canadian legal rights and workarounds related to income splitting.
Pension Income Splitting (T1032) — Cut Your Retirement Tax Bill in Half
Retired couples can allocate up to 50% of eligible pension income to the lower-earning spouse simply by filing Form T1032 — reducing taxes, avoiding OAS clawback, and unlocking the pension income tax credit.
Income Splitting with a Spousal RRSP
A spousal RRSP allows the higher-earning partner to contribute to the lower-earning partner's RRSP, claim the deduction at a higher marginal tax rate today, and then have the lower-earning partner withdraw those funds in retirement at a lower marginal rate — potentially saving tens of thousands of dollars in lifetime tax.
Prescribed Rate Loan Income Splitting — Shift Investment Income to a Lower-Income Spouse
By lending money to a lower-income spouse or adult family member at the CRA's prescribed interest rate, the investment returns are taxed in their hands — potentially saving thousands annually.
RRSP Meltdown Strategy — Draw Down Your RRSP Tax-Efficiently Before Forced Conversion
Canadians who will have large RRSPs at 71 face a 'RRSP time bomb' — mandatory RRIF minimum withdrawals that push them into high tax brackets.