Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Can income paid out of a spousal RRSP be split between spouses for reporting purposes?
Position: No.
Reasons: The income is taxed in the annuitant's hands unless subsection 146(8.3) requires it to be included in contributor's income.
XXXXXXXXXX 2000-001712
M.P. Sarazin
May 29, 2000
Dear Sir:
Re: Splitting RRSP Income with Spouse
This is in response to your letter of May 5, 2000, which was originally sent to the St. John's Tax Centre, wherein you requested permission to split the income received by your wife from a registered retirement savings plan ("RRSP").
You started a business out of your home in the late 1970s. Your wife did all of the typing, filing and office-related functions for your business. Over the years, you contributed amounts into a spousal RRSP. You were the contributor and your wife was the annuitant under the spousal RRSP. For estate planning purposes, your bank accounts and investment accounts are all held jointly by you and your wife and the related income is split between you and your wife for income tax purposes. You would like to split all of the RRSP income that is received by your wife each year and you would also like us to allow to do this retroactively to previous years.
The Canada Customs and Revenue Agency (the "Agency") has provided its general views on this topic in the enclosed Interpretation Bulletin IT-307R3, Spousal Registered Retirement Savings Plans. You will note that paragraph 14 of IT-307R3 states very clearly that any amount received by the taxpayer's spouse out of a spousal RRSP is income of the spouse even though the taxpayer may have made part or all of the contributions to the RRSP. There is no provision in the Act that allows you split RRSP income between you and your spouse. In the Summary to IT-307R3 it notes that the main benefit of a spousal plan is that it allows RRSP income to be included in the annuitant's income instead of the contributor's income and that generally this is desirable because the annuitant may be in a lower personal tax bracket than the contributor in the year the amounts are withdrawn from the RRSP.
We have also enclosed a copy of Interpretation Bulletin IT- 500R titled "Registered Retirement Savings Plans - Death of an Annuitant". This bulletin discusses the income tax treatment of payments out of an RRSP made on or after the death of the annuitant. You may want to consider the points made in this bulletin as part of your estate planning.
We trust the above comments will be helpful.
Yours truly,
Patricia Spice
for Director
Financial Industries Division
Income Tax Rulings Directorate
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