Save on taxes with a spousal RRSP
You’ll get the same tax advantage as if you were your own
GST holiday break: Is it good for Canada’s economy?
Economists share how the temporary tax cut and relief cheques may play into Canada’s growth picture.
Have extra RRSP room (and a spouse)? Try setting up a spousal RRSP account and make contributions to it in the name of your lower-earning partner. You’ll get the same advantage as if you were putting income into your own RRSP (a tax refund on contributions), but here’s the kicker: when the money is later withdrawn, it will be taxed in your lower-income spouse’s hands at a lower rate. Just be aware of the Canada Revenue Agency’s attribution rules: you can’t make a contribution in the same year you withdraw the money, or in either of the two previous tax years. Plus, the total combined contributions to your own RRSP and your spouse’s RRSP cannot exceed your own deduction limit.
» How spousal RRSP withdrawals work
Tax savings Take, for example, Alberta couple Joey, an oil sands worker earning $105,000 per year, and Claudia, a stay-at-home mom with no income. If Joey deposits $10,000 into a spousal RRSP for Claudia and leaves it there for three years, he’ll save $3,600 in taxes, because when the money is withdrawn it will be taxed at her lower marginal rate.
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
Related Articles
How to pay yourself as a power of attorney in Ontario
Should you be paid as a power of attorney? Learn about the compensation rules in Ontario and how to...
Canada’s income tax brackets for 2024, plus the maximum tax you’ll pay based on income
Want an idea of how much tax you paid—or will be paying—for 2024? Here are the federal and provincial...
What to know as Canada’s capital gains tax changes remain in legal limbo
The federal government’s capital gains inclusion rate increase has yet to become law. There’s a slight chance it may...
How to report foreign income in Canada
Canadians have reporting requirements for foreign assets, income and tax paid. Here’s how to claim each of these on...
How to talk to your family about crypto
Are your parents anxious about your interest in crypto investing? Here’s how to have family conversations about this and...
How to plan for taxes in retirement in Canada
In retirement, some income is not subject to withholding tax, and you may potentially owe tax after filing each...
How income from digital platforms is taxed in Canada
Driving for Uber or writing on Fiverr? Here’s what you need to know about filing your taxes.
Year-end tax and financial planning considerations
Some strategies are time-sensitive, while others can help you start the new year on the right foot.