Reporting pension income splitting

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Reporting pension income

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Pre-test question

Instructions

  1. Open the tax software
  2. Review the Background information and Required slips (tax slips, receipts, etc.)
  3. Provide all required information for the appropriate sections of the tax software
  4. Once completed, compare your results with the solution provided
  5. Afterwards, refer to the Takeaway points

Background information

Situation

Nadia is currently unemployed, has no income and is married to Alexei. Alexei is retired and receives income from the CPP, OAS, interest on their investments, and superannuation (registered pension plan).

Identification information

Identification information
Name Alexei Reznikov
Social insurance number (SIN) 000 000 000
Address 123 Main Street
City, Province X0X 0X0
Date of birth (DOB) October 2, 1946
Marital status Married to:
Nadia Reznikov on July 23, 1983
SIN: 000 000 000
DOB: April 23, 1961

Required slips

T4A – Statement of Pension, Retirement, Annuity, and Other Income (for Alexei)

Text version of the above image

T4A – Statement of Pension, Retirement, Annuity, and Other Income
Protected B
Payer’s name: Bank of Canada
Recipient’s name and address:
Last name: Reznikov
First name: Alexei
123 Main Street
City, Province X0X 0X0
Box 012: Social insurance number: 000 000 000
Box 016: Pension or superannuation – line 11500: 23,709.56
Box 022: Income tax deducted – line 43700: 2,046.00

T4A(OAS) – Statement of Old Age Security (for Alexei)

Text version of the above image

T4A(OAS) – Statement of Old Age Security
Protected B
Issued by: Service Canada
Reznikov, Alexei
123 Main Street
City, Province X0X 0X0
Box 12: Social insurance number: 000 000 000
Box 18: Taxable pension paid: 6,778.44
Box 22: Income tax deducted: 0.00

T4A(P) – Statement of Canada Pension Plan Benefits (for Alexei)

Text version of the above image

T4A(P) – Statement of Canada Pension Plan Benefits
Protected B
Issued by: Service Canada
Reznikov, Alexei
123 Main Street
City, Province X0X 0X0
Box 12: Social insurance number: 000 000 000
Box 21: Number of months – disability: 6
Box 23: Number of months – retirement: 6
Box 22: Income tax deducted: 0.00
Box 14: Retirement benefit: 6,211.00
Box 16: Disability benefit: 8,216.00

T5 – Statement of Investment Income (for Alexei)

Text version of the above image

T5 – Statement of Investment Income
Protected B
Recipient’s name (last name first) and address:
Reznikov, Alexei
123 Main Street
City, Province X0X 0X0
Payer’s name and address:
Bank 1
456 Main Street
City, Province X0X 0X0
Box 13: Interest from Canadian sources: 85.00
Box 22: Recipient identification number: 000000000

Review your results

Solution to Reporting pension income.

Takeaway points

Steps to follow

  1. Review their background information and required tax slips
  2. Pension income splitting is a joint election that requires both spouses to prepare their tax returns at the same time:
    • when you complete the Spouse interview type, select Complete information (recommended) from the What information will you provide for your spouse? drop-down menu
  3. In Interview setup, tick the box next to Pension income, other income and split pension income, COVID-19 benefits (T4A, T4FHSA, T4A(OAS), T4A(P), T4-RCA, T4RSP, T4RIF, T1032) in the Pension and other income section and tick the box next to Interest, investment income and carrying charges/interest expenses/CNIL (T3, T5, T4PS, T5008, RC359) in the Investment income and expenses section
  4. Click T4A, T4FHSA and pension income in the left-side menu, then click the + signs next to T4A, T4A(OAS) and T4A(P) and enter the amounts from each tax slip
  5. Alexei’s T4A(P) indicates they received both CPP retirement and disability benefits throughout the year and since the sum of box 23 and box 21 (indicating number of months) must not exceed 12, you must enter 6 into both box 23 and box 21
  6. Click Interest, investment income and carrying charges in the left-side menu, then click the + sign next to T5 – Investment income and enter the amounts from Alexei’s T5
  7. When you complete Nadia’s Interview setup, ensure there are no boxes ticked in any section

Only box 16 of Alexei’s T4A – Statement of Pension, Retirement, Annuity, and Other Income is eligible for the pension income splitting.

The amount transferred to Nadia is reported on line 11600 of her tax return and the same amount is reported on line 21000 of Alexei’s tax return. Any income tax withheld from the eligible pension income (box 22 of the T4A) is split in the same proportion as that income and is found on line 43700.

The software automatically generates Form T1032, Joint Election to Split Pension Income, for each individual.

For more information, refer to UFile instructions.


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Date modified:
2024-12-20