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June 24, 2021

Time to catch up on pension splitting tax savings

Up until a few years ago, households where one retiree’s income was greater than their partner’s ended up paying significantly more tax than a household with a similar total income, but split evenly.

Now, however, pensioners are able to split their corporate pension plan income with their spouse or common law partner. Previously, they were unable to split any pension income, except in the case of the Canada Pension Plan.

To be eligible to split pension income, your spouse or common-law partner must be resident in Canada and you must be living together at the end of the year.

If you’ve been missing out on this somehow, here’s the good news: The election to split pension income can be made for up to three years after the election due date, notes tax planner Evelyn Jacks. Therefore, if you qualify, you’re still eligible to make the election for the past three tax years by filing the T1032 form with CRA.

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...