One or more of these methods may be relevant to you during your retirement years.


In retirement, you can save tax by having up to 50% of the higher-income spouse’s eligible pension income taxed at the other spouse’s lower tax rate. At age 65 or older, the most common types of pension income eligible for incomesplitting are Registered Retirement Income Fund (RRIF) payments, company registered pension plan (RPP) payments and life annuities from a Registered Retirement Savings Plan (RRSP). Note that the spouse receiving any of these payments doesn’t need to be 65 or older. Some retirees, depending on their retirement income strategy, convert all or a portion of their RRSP to a RRIF before the mandatory age of 71 to take advantage of income-splitting tax savings.


A spousal RRSP becomes a spousal RRIF in retirement. While pension incomesplitting enables you to allocate up to 50% of eligible pension income to your spouse, taking payments from a spousal RRIF allows you to split more than 50% of pension income.

Also, if you retire before 65, pension income-splitting is mainly limited to company RPP payments (except in Quebec, where residents are unable to split pension income under age 65). However, the lower-income spouse could make spousal RRSP or spousal RRIF withdrawals before 65, providing a source of retirement income that’s taxed at their lower rate.


The Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) allow a couple to save tax by splitting their pension amounts, reducing the higher-income earner’s benefit and increasing that of the lower-income earner. The resulting benefit amounts may not be equal, as
the government’s calculation only takes into account the period during which the couple has been living together.

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