The last week of October this year saw a large benefit for two or more million pensioners from the Conservative Government.
Keith MacIntyre, a tax partner with Grant Thorton in Halifax was quoted a saying that “it can save retirees a considerable amount of money” and that “pension income splitting can be a gigantic benefit for people. ”
How to start your calculation
The higher income spouse or common law partner, should assume most or all of the housing expenses, leaving the lower income partner with more money to invest.
And this action has run on effects. Reducing the income of the lower income partner could reduce or eliminate the clawback of the Old Age Security payments or the age credit for the higher income spouse.
Neither of these benefits should be overlooked. And there can be further tax savings if both partners can claim the pension income credit.
Life Annuity Retirement Benefits
Life annuities from a company pension plan can also be split, no matter the age.
And for those over 65, RRIF and life annuity payments from a RRSP can also be split by filing a joint election form.
So for pensioners it is the real income that is split as opposed to the family tax cut. So if, for example one receives $750 a month and the other $250, they can each receive $500 monthly if they are at least 60 years of age.
If all this seems a bit much, we suggest you speak to an accountant; they are the experts.