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Canada Pension Income Splitting Guide

the pension income splitting in Canada. The pension income splitting allows the Canadian residents to allocate up to 50% of the eligible pension income to the spouse or the common-law partner (the "pension credit splitting"). The splitting is achieved through the Form T1032 (the "Joint Election for the Pension Income Splitting"). The eligible pension income includes the RRIF annuity payments (for the individuals aged 65+), the superannuation and the pension payments from the employer pension plans (the DB and the DC plans), the annuity payments from the deferred profit-sharing plans (the DPSPs), the pooled registered pension plans (the PRPPs), and the foreign pension income (the US Social Security, the UK State Pension). The CPP/QPP sharing (the "CPP assignment") allows the spouses to split the CPP retirement benefits if both are 60+ and have been living together for at least 12 months. The RRIF income splitting is available to the individuals aged 65+ who receive the RRIF annuity payments (the "RRIF income" — the RRIF minimum withdrawal is eligible for the splitting). The splitting can reduce the OAS clawback (the OAS recovery tax) — by moving the income from the higher-income spouse to the lower-income spouse, the combined clawback is reduced. The Quebec allows the pension income splitting for the QPP retirement benefits (the "QPP sharing") and the RRIF income (the "Quebec pension income splitting" — the Form TP-1029.32).

Eligible Pension Income

• RRIF annuity payments (65+): The RRIF payments (the "annuity payments" from the RRIF) are eligible for the splitting if the taxpayer is 65+ at the end of the tax year. The RRIF minimum withdrawal (the "minimum RRIF payment") is eligible for the splitting.
• Employer pension plans: The retirement payments from the employer-administered pension plans — the defined benefit (DB) plans, the defined contribution (DC) plans, the group RRSPs (if the RRSP is converted to the RRIF), and the deferred profit-sharing plans (the DPSPs).
• Annuities: The personal annuity payments (the "annuity contracts" purchased from the insurance companies) that are included in the "pension income" (the life annuities, the fixed-term annuities). The annuity must be purchased with the funds from the RRSP, the RRIF, the DPSP, or the PRPP.
• Foreign pension income: The US Social Security benefits, the UK State Pension, the German Rentenversicherung, the French Assurance Retraite, and the other foreign pension payments that are taxable in Canada (subject to the Canada-US Tax Convention and the other tax treaties).
• Ineligible income: The RRSP withdrawals (the lump-sum RRSP withdrawals before the RRIF conversion), the CPP/QPP retirement benefits (the CPP is split through the separate "CPP sharing" application, not the T1032), the OAS and the GIS (the OAS cannot be split).

Form T1032 & Election Rules

• Joint election: The spouses must jointly elect to split the pension income. The Form T1032 must be filed with the tax returns of both spouses. The election must be made for each tax year (the "annual election").
• Maximum split: Up to 50% of the eligible pension income can be allocated to the spouse. The taxpayer cannot split more than 50% of the gross pension income (the "pension splitting limit").
• Recipient's tax: The spouse who receives the allocated pension income includes the amount in the income (the "split pension income") and pays the tax at the recipient's marginal rate. The taxpayer who made the allocation deducts the allocated amount from the pension income.
• Pension credit (Line 31400): The spouse who receives the split pension income can claim the "pension income amount" (the $2,000 non-refundable credit) on the received amount. The taxpayer who made the allocation cannot claim the pension credit on the allocated portion (the credit is calculated on the remaining pension income after the split).

CPP/QPP Sharing

• CPP assignment: The spouses can share the CPP retirement benefits (the "CPP sharing" or the "CPP assignment"). The application is made through the Service Canada (not the tax return). The sharing is calculated as 50% of the combined CPP pension entitlement of both spouses.
• Eligibility: Both spouses must be 60+ and have lived together for at least 12 consecutive months. The sharing is optional — the spouses can choose the start date (the "CPP sharing application").
• Tax effect: The CPP sharing reduces the CPP income of the higher-income spouse and increases the CPP income of the lower-income spouse (the "net income shift"). The CPP sharing can reduce the combined tax bill and the OAS clawback.

Tax Benefits of Pension Splitting

• Lower combined tax rate: By moving the income from the higher-income spouse to the lower-income spouse, the combined marginal tax rate is reduced (the "income averaging" effect). The benefit is most significant when the spouses are in the different tax brackets.
• OAS clawback reduction: The pension splitting reduces the net income of the higher-income spouse, potentially lowering or eliminating the OAS clawback (the 15% recovery tax on the OAS). The OAS clawback threshold is $90,997 (2025).
• Age amount preservation: The age amount (the $8,790 non-refundable credit for the seniors 65+) is phased out at the net income above $43,953. The pension splitting can keep the spouse's income below the phase-out threshold, preserving the age amount credit.
• Provincial credits: The provincial non-refundable credits (the age amounts, the pension income amounts, and the provincial tax credits) are also affected by the pension splitting (the lower-income spouse can claim the credits on the received pension income).

For the RRIF conversion rules and the minimum withdrawal requirements, see our RRSP Guide →. For the CPP sharing and the retirement benefits, see our CPP Guide →.