CPP retirement pension sharing

You may be able to share your Canada Pension Plan retirement benefits with your spouse to reduce your family’s overall taxes. By applying to share your pensions, the lower-income spouse can receive a portion of the higher income spouse’s retirement pension and pay tax on that pension income at their lower marginal tax rate.

To qualify for CPP retirement pension sharing: — You and your spouse must both be 60 years of age or over;

— You must be living with your spouse; and — You must have lived with your spouse during the time you, your spouse or both of you contributed to CPP.

In addition, if you both contributed to CPP, you must both be receiving your pension, or have applied to receive it. If only one of you contributed to CPP, the spouse who contributed to CPP must be receiving their pension, or have applied to receive it.

CPP pension sharing generally doesn’t result in an equal split of your CPP retirement benefits. CPP pension sharing does not change the total CPP you would have otherwise received as a couple; however, it may result in an overall family tax savings. This may be the case if one spouse is receiving more CPP and is in a higher tax bracket than the other spouse.

If you and your spouse meet the eligibility requirements and would like to share your CPP retirement pensions, you can apply through Service Canada. CPP pension sharing begins as soon as Service Canada approves your application. You cannot backdate your application.

You should obtain professional advice from a qualified tax, legal and/or insurance advisor before acting on any of the information in this article.

A. Craig Elder, CFP, FMA, CIM, FCSI, is a VicePresident, Portfolio Manager and Wealth Advisor with RBC Dominion Securities Inc. in Medicine Hat. RBC Dominion Securities is a member of the Canadian Investor Protection Fund. Source material provided by RBC Wealth Management. For more information on this and other financial strategies, contact Craig at www.acelder.ca or 403-504-2723