Generally speaking, the total tax on family income will be lowest when each member earns approximately the same level of income. Since 1987, recipients of CPP benefits have been able to elect to split CPP benefits with their spouse. Once the election is made, the benefits that accrued while you lived together are split 50/50. This will be beneficial in situations where one spouse has a higher pension than the other (for example, where only one spouse has worked and is receiving a pension). Diverting half of your benefits to your spouse will not result in income attribution as this is specifically excluded from the rules. Also, remember to invest the benefits received in your spouse's name since income earned on the accumulated CPP benefits will also not be subject to the income attribution rules.
For further information, visit the Service Canada website.
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 September 4, 2017.