Weekly Tax Tips
Is it better to contribute to my spouse's RRSP?
Date: 29 Jul 2011
The main benefit of a spousal Registered Retirement Savings Plan (RRSP) is that it will allow income splitting in the future, at retirement, since withdrawals will usually be taxable in the hands of your spouse.
When deciding whether to contribute to either your RRSP or to a spousal RRSP, you should attempt to estimate both your and your spouse's income from all sources in retirement. Your goal should be to equalize these incomes at that time - by doing so you will achieve income splitting which will minimize your taxes in your retirement years.
Note that with the pension income splitting rules, it is possible to split eligible pension income for taxation years after 2006. However, if both spouses have an RRSP on retirement, you will have more flexibility when splitting income.
For more information on RRSPs, click here to read our tax bulletin Answering Your RRSP Questions.
This tax tip is a publication of BDO Canada LLP on developments in the area of taxation. This material is general in nature and should not be relied upon to replace the requirement for specific professional advice. The information in this tax tip is current as of 29 Jul 2011.
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