David Demoe,
CFP
Financial
Advisor
Income
Tax Question
As
Appeared in The Business Link Niagara August 1, 2007
QUESTION
Is it true
that Canadian seniors can begin splitting their pension income in 2007?
ANSWER
Yes indeed it
is.
On
October 31, 2006, the federal government announced the ability to split up to
one half of their “qualifying pension income” with their spouse or common law
partner. This may be beneficial to Canadians who are currently subject to “Old
Age Security Clawback” if their income is in excess
of $63, 511 in 2007.
In
this case, one spouse may be able to divert as much as half of their current
pension income onto the tax return of their potentially lower income spouses
tax return. In addition, if this lower income spouse
does NOT currently receive any other eligible pension income, they would now be
entitled to qualify for the new $2,000 pension income tax credit. If the lower
income spouse cannot use any or all of this tax credit, it can be transferred
to your spouses tax return.
If
you are currently over 65 years of age, qualifying pension income includes
income from annuities, income from RRIF’s LIF’s and LRIF’s along with
income from an annuitized deferred profit sharing
plan (DPSP).
If under 65 years of age, you may qualify to split income
from a Registered Pension Plan (RPP), or a pension from an employer-sponsored
defined benefit or contribution plan.
Assante Capital Management Ltd. (Member CIPF)
E-mail: ddemoe@assante.com
Tel:
905-680-3095 ∙ Toll free: 866-434-9292