Pension Income You Can Split With Your Spouse in Retirement

Income splitting lets you shift taxable income from your own tax return to the returns of family members. It’s most commonly used between married or common-law spouses, though in some circumstances transfers to dependent children are possible. This article explains how pension income splitting works, which types of retirement income qualify, and the key rules to consider when planning to split retirement income for tax or benefit purposes.

Can you split your income?

Not all pension or retirement income can be split. The table below summarizes common retirement income types and whether they generally qualify for pension income splitting under Canadian tax rules. Tap or follow each pension type for more detail on why and how it applies.

Pension income type	Can you split your income?
DB pensions	Yes
SERPs	No (except the registered portion)
RRSP withdrawals	No
RRIF withdrawals	Yes (from age 65)
Foreign pensions	Depends
Foreign retirement accounts	Depends
CPP	May be split by specific application
OAS	No
From a corporation	Yes (special rules, usually at 65)

Income splitting for defined benefit (DB) pensions

Defined benefit (DB) pensions are calculated with a formula that typically considers your salary history, years of service and other plan-specific factors. Most DB plans begin payments at or after age 55, though early payments are sometimes possible depending on the plan.

DB pension income is eligible for pension income splitting with a spouse or common-law partner. You can elect to allocate up to 50% of eligible DB pension income to your spouse. On the tax returns, the pensioner claims a deduction and the receiving spouse includes the transferred amount as income. Couples generally split pension income only when it produces a net family benefit—such as a lower combined tax bill or improved entitlement to income-tested government benefits.

Can you split income for supplemental executive retirement plans (SERPs)?

Supplemental executive retirement plans (SERPs) are non-registered arrangements often used for executives. When a SERP includes both a registered component and an unregistered top-up, only the registered portion generally qualifies for pension income splitting. The unregistered portion must be reported on the recipient’s tax return and is not eligible for the 50% transfer treatment. Pension slips should clearly separate registered and unregistered amounts, making it easier to determine what can be split.

RRSPs and RRIFs: what qualifies?

Withdrawals directly from a registered retirement savings plan (RRSP) do not qualify for pension income splitting. However, once an RRSP is converted to a registered retirement income fund (RRIF), withdrawals from that RRIF may be eligible for splitting beginning at age 65.

You are not required to convert an RRSP to a RRIF until December 31 of the year you turn 71, and RRSP withdrawals can technically begin earlier. Because RRIF withdrawals can be split starting at 65, some people choose to convert some or all of an RRSP before age 65 to create split-eligible income. Before converting, consider required minimum withdrawals from a RRIF and how those payments fit your broader retirement cash-flow and tax plan. Partial conversions are allowed; you do not have to convert the entire RRSP at once.

Foreign pensions and retirement accounts

Foreign pension income may be eligible for pension income splitting if it is taxable in Canada. Most foreign pensions are taxable here, but specific qualifications depend on the type of foreign retirement plan and the tax treatment in Canada.

For example, income from a U.S. 401(k) is typically considered eligible for pension income splitting, while income from a U.S. individual retirement account (IRA) generally follows rules similar to RRSPs and may not be eligible. Because a 401(k) can be rolled into an IRA, it is important to evaluate whether converting a 401(k) to an IRA would eliminate the ability to split pension income before making transfers.

Canada Pension Plan (CPP) and Old Age Security (OAS)

Although CPP and OAS are retirement benefits, they are not eligible for the standard pension income splitting election used for private pensions. However, there is a separate mechanism for CPP: when applying for CPP retirement pensions, couples can complete an application to have CPP contributions accumulated during the relationship compared and shared for future payments. This pension-sharing arrangement can shift portion of future CPP payments from one spouse to the other, which may be beneficial depending on lifetime contribution histories and projected retirement income. Old Age Security (OAS) does not qualify for pension income splitting.

Options for business owners and TOSI rules

The Tax on Split Income (TOSI) rules introduced in 2019 restrict the ability of owner-managers to shift corporate income to family members who are not actively involved in the business. In many cases, dividends paid to a non-active spouse are subject to TOSI and taxed accordingly, unless specific exceptions apply. One such exception is age: once the business owner reaches 65, dividends paid to a spouse may be exempt from TOSI and can be taxed in the spouse’s hands, allowing some effective splitting of corporate income as a form of notional pension.

How to plan for pension income splitting

Planning ahead increases the chance that income splitting will deliver tax or benefit advantages. One commonly used strategy is contributing to a spousal RRSP: the higher-income spouse claims the tax deduction while the funds are held in the lower-income spouse’s RRSP. When the lower-income spouse withdraws the funds later, the income is taxed in their hands. Beware of attribution rules that can apply if funds are withdrawn within three years of a spousal RRSP contribution.

Even if you expect to use pension income splitting after retirement, spousal RRSPs can provide extra flexibility and protection in case tax rules change. Each year when you file taxes, reassess whether splitting your pension income is advantageous—sometimes splitting reduces overall tax, and sometimes preserving income in one spouse’s return maximizes government benefits or credits.