Split Your Income With Your Spouse for Tax Savings

When you file your 2007 income tax returns, new tax rules allow you to allocate up to half of your HOOPP pension income to your spouse or common-law partner. This could be particularly beneficial when one partner has significantly more income than the other. Shifting some of that income onto a partner's tax return may reduce the amount of tax, overall, that the couple pays.

The amount allocated is deducted in determining the net income of the person who actually received the pension income, and it is included in calculating the net income of the spouse or common-law partner. Because pension splitting affects the calculation of income and tax payable for both persons, both must agree to the allocation. Couples must complete the Form T1032, Joint Election to Split Pension Income, and submit it with their tax returns to the Canada Revenue Agency before the filing deadline.

NOTE: Income splitting is a personal tax filing measure that does not involve HOOPP or affect your pension payments. Only particular types of pension income are eligible for splitting. Contact the Canada Revenue Agency's individual income tax enquiries line for more information: 1-800-959-8281. Or contact your financial advisor to discuss if pension income splitting makes sense for you.

March 2008