Pension income splitting

❤️ Pension income splitting is a tax strategy that allows eligible individuals to divide their pension income with their spouse or common-law partner, potentially lowering their overall tax burden. This option is available for certain types of pension income, depending on the income's origin, the recipient's age, and the conditions under which the income is received. Our "Eligible Income for Pension Income Splitting" section provides an in-depth overview of which pension incomes qualify for splitting.

Starting from the 2013 tax year onwards, there's a specific exception to note: while distributions from a retirement compensation arrangement (marked as Box 17 on the T4A-RCA slip) are not eligible for the pension income amount, they can still be split for individuals aged 65 and older. This is permitted up to the limit where such distributions do not surpass $119,700 after subtracting any other income the taxpayer has that is eligible for splitting. This mechanism offers a way to optimize tax advantages by effectively distributing pension income between partners.