Canadian residents receiving pension have good news when it comes to tax time. You can now disperse portions of pension earnings to some one else, say your spouse, allowing these funds to be taxed less if they are in a lower tax bracket than you are. Not every pension plan is available to be split in this way, but it is very helpful for many. You must either be part of a common law partnership, or married to the person that you allocate your funds to for this system to work. This is great news for many, because a fixed income does not fix much, especially when you have to pay a higher tax rate.
Both you and the individual that you choose to receive a portion of your retirement earnings have some paperwork to do in order to utilize this tax break. You need to fill out forms together and sign them together, including Form T1032, Joint Election to Split Pension Income. Some of these form lines will be different for the two of you. Having a conversation with a tax preparation expert can help you plan this out to benefit you the most when it comes to tax season. Saving money on taxes is always great to keep what you earned for yourself.