Spousal RRSPs and Other Strategies

If you earn substantially more income than your spouse (or vice versa), an income splitting strategy may be a smart way to reduce your family’s tax bill.

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Two Popular Income Splitting Strategies

Expense Funding Strategy

  • The higher income spouse pays all household expenses
  • The lower income spouse invests as much as possible of their own income
  • With this strategy, the investment income will be taxed at the marginal rate of the lower income spouse

Spousal RRSP Strategy

  • The higher income spouse contributes to the lower-income spouse’s RRSP
  • The spouse making the contribution claims in on their tax return, reducing their taxable income
  • The goal is to contribute until the planned retirement income of both spouses is about the same

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