4- Pension income splitting

An individual may allocate up to one-half of his/her income eligible for the pension income credit to his/her spouse. An annual election must be made by both spouses. Different amounts can be allocated for Quebec purposes than for federal purposes.

Eligible pension income for individuals who are 65 years of age or older includes:

• RPP and DPSP benefits;
• RRIF payments;
• Life annuities from an RRSP (excluding simple RRSP withdrawals);
• Certain retirement compensation arrangement income;
• Certain PRPP or VRSP benefits.

Eligible pension income of individuals who are under 65 years of age¹² includes, for federal purposes, RPP life annuity payments as well as certain other payments received following the death of a spouse or common-law partner.

OAS benefits, the GIS, CPP or QPP payments and RRSP withdrawals (other than an annuity) are not eligible for splitting.

Consider splitting your pension income with your spouse in order to avoid repaying your OAS, to keep your age credit and to allow your spouse to claim the pension income credit.

1. QPP and CPP Benefits

If certain conditions are met, QPP and CPP (see Section XII) benefits can be split between spouses upon request. They simply need to make a request with the relevant tax authorities.

¹² In Quebec, an individual may not split any retirement income before 65 years of age.