INCOME-SPLITTING IN RETIREMENT

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

PENSION INCOME-SPLITTING

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.

SPOUSAL RRIF PAYMENTS

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.

CPP/QPP SHARING

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.

This material was prepared for and published on behalf of your financial advisor and is intended only for clients resident in the jurisdiction(s) where their representative is registered. This material is provided solely for informational and educational purposes and is not to be construed as an offer or solicitation for the sale or purchase of any securities or as providing individual investment, tax or legal advice. Consult your professional advisor(s) prior to acting on the basis of this material. Insurance products are available through advisors registered with applicable insurance regulators. Individual equities are available only through representatives of Assante Capital Management Ltd. In considering any particular investment, please remember that past performance is no guarantee of future performance. Although this material has been compiled from sources believed to be reliable, we cannot guarantee its accuracy or completeness. All opinions expressed and data provided herein are subject to change without notice. Neither CI Assante Wealth Management or its dealer subsidiaries Assante Capital Management Ltd. and Assante Financial Management Ltd., nor their affiliates or their respective officers, directors, employees or advisors are responsible in any way for any damages or losses of any kind whatsoever in respect of the use of this material. CI Assante Wealth Management is a registered business name of Assante Wealth Management (Canada) Ltd. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Assante Financial Management Ltd. is a member of the Mutual Fund Dealers Association of Canada and the MFDA Investor Protection Corporation (excluding Quebec). © 2022 CI Assante Wealth Management. All rights reserved.