If you receive pension income that qualifies for the pension income tax credit, you may be able to transfer up to half of this income to your spouse. Why would you want to do that? If your spouse is in a lower income tax bracket than you, they will pay less tax that you would, thus providing an overall tax saving your family.
The savings can be substantial.
If you are over 65, pension income that qualifies includes lifetime annuity payments under an RPP, an RRSP and an RRIF. It does not include CPP and OAS payments. If you are under 65, pension income that qualifies includes lifetime annuity payments under an RPP.
Another advantage of splitting pension income is that is may help prevent the CRA from clawing back some of your OAS pension payments by lowering your net income.
