Do you qualify to split your pension income?

You (the Pensioner) and your spouse or common-law partner (the Pension Transferee) can elect to split your eligible pension income received in the year if you meet the following conditions:

  • you are married or in a common-law partnership with each other in the year and are not, because of a breakdown in your marriage or common-law partnership, living separate and apart from each other at the end of the tax year and for a period of 90 days or more commencing in the year (see the note below); and
  • you are are both resident in Canada on December 31 of the year; or
  • if deceased in the year, resident in Canada on the date of death; or
  • if bankrupt in the year, resident in Canada on December 31 of the year in which the tax year (pre- or post-bankruptcy) ends.
  • you received pension income in the year that qualifies for the pension income amount.

Note
You and your spouse or common-law partner will still be eligible to split pension income if living apart at the end of the year for medical, educational, or business reasons (rather than a breakdown in the marriage or common-law partnership).

Eligible pension income can only be split between you (the Pensioner) and your spouse or common-law partner (the Pension Transferee).

You are not prevented from splitting your eligible pension income because of the age of your spouse or common-law partner.

What is eligible pension income?

Eligible pension income is generally the total of the following amounts received by the pensioner in the year (these amounts also qualify for the pension income amount):

  • the taxable part of life annuity payments from a superannuation or pension fund or plan; and
  • if they are received as a result of the death of a spouse or common-law partner, or if the pensioner is age 65 or older at the end of the year:
    • annuity and registered retirement income fund (including life income fund) payments; and
    • Registered Retirement Savings Plan annuity payments.

Note
Old Age Security and Canada or Quebec Pension Plan or Saskatchewan Pension Plan payments, as well as amounts received under a retirement compensation arrangement, do not qualify. Generally, variable pension benefits paid from a money purchase provision of a Registered Pension Plan are not considered life annuity payments and do not qualify unless the pensioner is age 65 or older at the end of the year or the variable benefits are received as a result of the death of a spouse or common-law partner.

How do you split your pension income?

You (the Pensioner) and your spouse or common-law partner (the Pension Transferee) must make a joint election on Form T1032, Joint Election to Split Pension Income, and submit it with your and your spouse’s or common-law partner’s income tax returns for the year by your filing due date.

You can allocate up to half (50%) of your eligible pension income to your spouse or common-law partner.

Only one joint election can be made for a tax year. If both you and your spouse or common-law partner have eligible pension income, you will have to decide which one of you will split his or her pension income.

For more information, see Form T1032, Joint Election to Split Pension Income.

Note
If you and your spouse or common-law partner elected to split eligible pension income in 2008, you do not have to use the same percentage in 2009.

How do you report your split-pension income amount?

Pensioner

If you (the Pensioner) and your spouse or common-law partner (the Pension Transferee) have jointly elected to split your eligible pension income by completing Form T1032, Joint Election to Split Pension Income, you (the Pensioner) can deduct on line 210 of your return the elected split-pension amount from line E of Form T1032.

Pension Transferee

If you (the Pension Transferee) and your spouse or common-law partner (the Pensioner) have jointly elected to split your spouse’s or common-law partner’s eligible pension income by completing Form T1032, Joint Election to Split Pension Income, you (the Pension Transferee) must enter on line 116 of your return the elected split-pension amount from line E of Form T1032.

How do you claim the pension income amount?

If you (the Pensioner) and your spouse or common-law partner (the Pension Transferee) elected to split your eligible pension income, follow the instructions at Step 4 on Form T1032, Joint Election to Split Pension Income, to calculate the amount to enter on line 314 of your and your spouse’s or common-law partner’s Schedule 1.

You (the Pensioner) will be able to claim whichever amount is less: $2,000 or the amount of your eligible pension income, after excluding amounts allocated to your spouse or common-law partner (the Pension Transferee).

Your spouse or common-law partner (the Pension Transferee) will be able to claim whichever amount is less: $2,000 or the amount of his or her pension income that is eligible for the pension income amount (based on the calculation for line 314 on the federal worksheet), including the allocated pension income that is eligible for the pension income amount.

Notes
The pension that qualifies for the pension income amount for the pensioner does not necessarily qualify for the pension income amount for the spouse or common-law partner (the Pension Transferee), because eligibility can depend on age.

If your spouse or common-law partner (the Pension Transferee) was under age 65 on December 31 of the year and you (the Pensioner) are age 65 or older and you received any RRIF, RRSP, or other annuity payments (other than amounts received due to the death of his or her former spouse or common-law partner) that you want to allocate to your spouse or common-law partner (the Penion Transferee), see the note in Step 4 of Form T1032, to determine the amount to enter on line 314 of your spouse’s or common-law partner’s Schedule 1.