3 Steps to Pension Income Splitting
Step 1: See if you are qualified
Visit the Canada Revenue Agency (CRA) website to see the specific requirements. Qualified applicants must:
- be in a married or common-law relationship;
- be a Canadian resident in the tax year in question as does the beneficiary of the income splitting; and
- have received pension income that qualifies for CRA's definition of pension income.
Step 2: See what qualifies as eligible pension income
Eligible pension income is the total amount of the following:
- the taxable part of life annuity payments from a superannuation or pension plan; and
- annuity and RRIF (including life income fund) payments and RRSP annuity payments, if they are received as a result of the death of a married or common-law spouse, or if the pensioner is age 65 or older at the end of the year.
Income from Old Age Security and Canada Pension Plan is not eligible.
Step 3: Apply to the CRA
You and your married or common-law spouse must make a joint election on the Joint Election to Split Pension Income (Form T1032). Only one joint election can be made in a tax year. In other words, if both you and your spouse have eligible pension income, only one of you can split your pension income.
If you're filing electronically, keep Form T1032 in case the CRA asks to see it. If you're filing a paper return, the form must be completed, signed and attached to both your and your spouse's returns. The information on the forms must be the same.