{"id":30,"date":"2026-03-06T11:15:00","date_gmt":"2026-03-06T16:15:00","guid":{"rendered":"https:\/\/mytaxservices.ca\/pensions\/?page_id=30"},"modified":"2026-03-05T16:25:34","modified_gmt":"2026-03-05T21:25:34","slug":"pension-income-splitting","status":"publish","type":"page","link":"https:\/\/mytaxservices.ca\/pensions\/pension-income-splitting\/","title":{"rendered":"Pension Income Splitting: How to Reduce Your Tax Bill"},"content":{"rendered":"\n<p>Pension income splitting is a tax strategy that many retired couples in Canada can use to lower their overall tax bill. It lets a spouse who receives eligible pension income allocate part of that income to their spouse or common\u2011law partner. <\/p>\n\n\n\n<p>This can reduce the tax you and your partner pay by shifting income to the spouse in the lower tax bracket. The rules and benefits are set by the Canada Revenue Agency (CRA). <\/p>\n\n\n\n<p>Understanding how it works and whether you qualify can help you keep more of your retirement income.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What Is Pension Income Splitting in Canada<\/h2>\n\n\n\n<p>Pension income splitting lets you transfer up to 50 percent of your eligible pension income to your spouse or common\u2011law partner for tax purposes. <\/p>\n\n\n\n<p>When you do this, you and your spouse file a joint election, and the split amount is reported on both tax returns. This does not involve transferring any actual cash. It only changes how income is reported to the CRA.<\/p>\n\n\n\n<p>If you and your spouse are residents of Canada and not separated due to a breakdown in your relationship, you can make this election. <\/p>\n\n\n\n<p>The process is done by filing <a href=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/forms-publications\/forms\/t1032.html\" type=\"link\" id=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/forms-publications\/forms\/t1032.html\">Form T1032<\/a>, Joint Election to Split Pension Income with your tax return each year.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What Types of Pension Income Can Be Split<\/h2>\n\n\n\n<p>Not all pension income qualifies for splitting. Eligible pension income includes many retirement income sources, but some are excluded. Eligible income generally includes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Payments from a registered <a href=\"https:\/\/mytaxservices.ca\/pensions\/university-pension-plan-upp\/\" type=\"link\" id=\"https:\/\/mytaxservices.ca\/pensions\/university-pension-plan-upp\/\">pension plan<\/a> or superannuation plan<br><\/li>\n\n\n\n<li>Annuity payments from a <a href=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/tax\/individuals\/topics\/rrsps-related-plans\/registered-retirement-savings-plan-rrsp.html\" type=\"link\" id=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/tax\/individuals\/topics\/rrsps-related-plans\/registered-retirement-savings-plan-rrsp.html\">Registered Retirement Savings Plan (RRSP)<br><\/a><\/li>\n\n\n\n<li>Payments from a <a href=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/tax\/individuals\/topics\/registered-retirement-income-fund-rrif.html\" type=\"link\" id=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/tax\/individuals\/topics\/registered-retirement-income-fund-rrif.html\">Registered Retirement Income Fund (RRIF)<\/a> if you are 65 or older at the end of the year<br><\/li>\n\n\n\n<li>Certain annuity or pension amounts received because of the death of a spouse or common\u2011law partner<br><\/li>\n\n\n\n<li>Some other qualifying amounts from retirement plans<br><\/li>\n<\/ul>\n\n\n\n<p>Income that cannot be split includes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Old Age Security (OAS) benefits<br><\/li>\n\n\n\n<li>Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) benefits<br><\/li>\n\n\n\n<li>Foreign pension income that is tax\u2011free because of a tax treaty<br><\/li>\n\n\n\n<li>Certain amounts moved between registered accounts without being paid as pension income<br><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">How Do You Elect to Split Your Pension Income<\/h2>\n\n\n\n<p>To use pension income splitting, you and your spouse must complete Form T1032, Joint Election to Split Pension Income. You must sign and include this form with your tax return for that year. <\/p>\n\n\n\n<p>The form asks you to state how much eligible pension income each of you wants to allocate. You can split up to 50 percent of the eligible pension income.<\/p>\n\n\n\n<p>Once the election is made, you must enter the split amount on your tax return. <\/p>\n\n\n\n<p>The receiving spouse includes the split amount on line 11600, Elected split\u2011pension amount of their tax return.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How Does Pension Splitting Reduce Your Tax Bill<\/h2>\n\n\n\n<p>Pension income splitting helps reduce the combined tax bill when one spouse is in a higher tax bracket than the other. By shifting income to the spouse with lower taxable income, you can reduce the total tax owed. <\/p>\n\n\n\n<p>This is because Canada\u2019s tax system uses progressive tax rates, where higher income is taxed at higher rates.<\/p>\n\n\n\n<p>For example, if one spouse is in a high tax bracket and the other is in a lower bracket, splitting up to 50 percent of eligible pension income can reduce the amount of income taxed at the higher rate. <\/p>\n\n\n\n<p>This can lower federal and provincial taxes for your household.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How Pension Splitting Affects Tax Credits<\/h2>\n\n\n\n<p>Pension income splitting can also help you qualify for tax credits that are based on net income. Each spouse may be eligible for a non\u2011refundable pension income tax credit of up to $2,000, depending on the type of pension income they report. <\/p>\n\n\n\n<p>Allocating income to a spouse who previously did not have eligible pension income can allow them to claim this credit as well.<\/p>\n\n\n\n<p>Keep in mind that splitting pension income may affect other income\u2011based benefits. <\/p>\n\n\n\n<p>For example, net income changes could affect Old Age Security (OAS) clawbacks or eligibility for other credits. Consult CRA guidance when planning your split.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Who Can Use Pension Income Splitting<\/h2>\n\n\n\n<p>You can use pension income splitting if all of the following are true:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You and your spouse or common\u2011law partner lived together on December 31 of the tax year and were not separated due to relationship breakdown.<br><\/li>\n\n\n\n<li>At least one of you received eligible pension income in the tax year.<br><\/li>\n\n\n\n<li>You file Form T1032 jointly for that year.<br><\/li>\n<\/ul>\n\n\n\n<p>There is no minimum age requirement for defined pension plan income. <\/p>\n\n\n\n<p>Other types of eligible pension income may require you to be 65 or older.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Can You Split Income Every Year<\/h2>\n\n\n\n<p>Yes. You must file a separate joint election for each tax year you wish to split pension income. <\/p>\n\n\n\n<p>The rules are the same each year, and you can choose a different percentage of income to allocate each year if you want.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Does Pension Splitting Affect Other Benefits<\/h2>\n\n\n\n<p>Pension income splitting changes how income is reported but does not transfer actual funds. It may affect income\u2011tested benefits or credits. <\/p>\n\n\n\n<p>For example, it could reduce Old Age Security clawbacks by lowering the higher\u2011income spouse\u2019s net income. <\/p>\n\n\n\n<p>It may also affect eligibility for other tax credits based on individual income.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Is Pension Income Splitting Worth It<\/h2>\n\n\n\n<p>Pension income splitting can significantly reduce your combined tax bill if you and your spouse are in different tax brackets. It also lets both spouses potentially use the pension income tax credit. <\/p>\n\n\n\n<p>Each couple\u2019s situation is different, and it may help to speak with a tax professional or review CRA rules before deciding.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Where to Find Official Forms and Information<\/h2>\n\n\n\n<p>Visit the CRA\u2019s official page on Pension Income Splitting to learn more and download <a href=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/forms-publications\/forms\/t1032.html\" type=\"link\" id=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/forms-publications\/forms\/t1032.html\">Form T1032<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Pension income splitting is a tax strategy that many retired couples in Canada can use to lower their overall tax [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"iawp_total_views":0,"footnotes":""},"class_list":["post-30","page","type-page","status-publish","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - 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