Pension Income Splitting

This Income Tax Act provision allows retired couples to reduce their overall taxes.

A retiree can allocate up to half of their pension income to their lower-income spouse or partner when filing a tax return. This feature is designed to drop the higher-income spouse or partner into a lower tax bracket.

Information and application forms are at the Canada Revenue Agency(CRA) website

Note: This information does not constitute investment advice; talk to a financial planner or contact the CRA for more details.

What Types of Pension Income can be Split?

Eligible for pension income splitting:

• Your OMERS retirement, disability or survivor pension, regardless of your age
• Pension from another registered pension plan (RPP), regardless of your age
• If the recipient is 65 years of age or older, they may also split income from…
  • Registered Retirement Savings Plan (RRSP) annuity
  • Registered Retirement Income Fund (RRIF)
  • LIF (a locked-in RRIF)
  • Deferred Profit Sharing Plan (DPSP) annuity.

Not eligible for pension income splitting:

• Retirement Compensation Arrangement pension (RCA; including OMERS RCA) for high income earners
• Old Age Security (OAS)
• Guaranteed Income Supplement (GIS)
• Canada Pension Plan (CPP) [Note: there are exceptions; talk to a financial planner or contact the CRA for more information.]
• Québec Pension Plan
• RRSP withdrawals
• If the recipient is under age 65, they may not split income from…
  • RRSP annuity
  • RRIF
  • DPSP annuity.

Setting Up Pension Income Splitting

Pension income splitting is set up through Canada Revenue Agency (CRA), not through OMERS.

The retired member and the spouse or partner must complete a Form T1032, Joint Election to Split Pension Income.

There is a line on the income tax return for the retired member to deduct the pension amount allocated to their spouse, and one for the spouse to report the allocated pension amount.