Section 60.03

Subsection 60.03(1)

Eligible Pension Income

Administrative Policy

18 March 2014 Internal T.I. 2013-0515081I7 - Pension income splitting - RCAs

income splitting where RCA payments

Numerical examples where an individual over 65 in receipt of a pension out of a registered pension plan also receives an annuity out of a RCA.

4 July 2014 External T.I. 2013-0515541E5 - Life annuity payment out of an RCA

lifetime annuity is periodic for life/to be eligible must be in equal amounts

What is the meaning of "life annuity"? CRA responded:

RCA benefits that are payable on a periodic basis for the lifetime of the member of the RCA or jointly for the lifetimes of the member and his or her spouse or common-law partner will be considered in the form of a life annuity.

However, to qualify as eligible pension income, the RCA benefits must … be payable in substantially the same form as the RPP benefits (i.e. payable for life in equal periodic amounts subject to inflation or other adjustments permitted under the RPP).

7 November 2013 External T.I. 2013-0501021E5 - Eligible income for pension income splitting

unfunded SERP

Respecting "the eligibility of amounts received out of a supplementary employee retirement plan ("SERP") for pension income splitting", CRA stated:

A SERP is a plan or arrangement, either funded or unfunded, that provides supplementary benefits to the beneficiary. Where such a plan is funded, the arrangement would generally be considered an RCA. However, where the plan is unfunded, the arrangement is not considered to be an RCA. As noted above, the amended definition of eligible pension income in subsection 60.03(1) of the Act only includes, among other things, payments out of an RCA in the form of life annuity payments that are supplemental to a pension received out of a RPP. As a result, payments out of an unfunded SERP are not eligible for pension income splitting.

25 June 2012 External T.I. 2011-0398691E5 - Conversion of U.S. Traditional IRA into Roth IRA

CRA stated that, where a Canadian-resident individual converts a traditional US Individual Retirement Account ("IRA") to a Roth IRA, the amount of the IRA will be included in the taxpayer's income. Because payments out of an IRA are not "eligible pension income" under s. 118(7), pension splitting under s. 60.03 is not available.


Jim Kahane, Uros Karadzic, Simon Létourneau-Laroche, "A Fresh Look at Retirement Compensation Arrangement: A Flexible Vehicle for Retirement Planning", Canadian Tax Journal (2013) 61:2, 479 – 502.

Overview (p. 488)

…Spouses will now be able to split RCA distributions to the extent that the beneficiary of the income is at least 65 years of age and benefits received are in the form of a life annuity supplemental to an RPP. [fn 40: Subsection 60.03(1)..."eligible pension income," subparagraph (b)(i).] The amount that is eligible for splitting is limited to the lesser of the RCA income for the year and the amount, if any, of the beneficiary's other eligible pension income in excess of the defined benefit limit for the year ($2,696 for 2013) [fn 41: Regulation 8500(1).] multiplied by 35. . [fn 42: Subsection 60.03(1)…"eligible pension income," subparagraph (a)(ii).]

Paragraph (a)

Administrative Policy

14 May 2019 CLHIA Roundtable Q. 14, 2019-0799191C6 - CLHIA Q. 14 - IPPs and pension splitting

minimum IPP top-up amounts are ineligible

The 2011 budget introduced measures for individual pension plans (“IPPs”) that generally parallel the “minimum amount”-based income withdrawal rules for RRIFs, so that minimal withdrawals are required from an IPP if the plan member has attained 71.

CRA considers that any additional payment that an IPP is required to make in a year to comply with the IPP minimum amount rules is not eligible to be split with a spouse/common-law partner under the s. 60.03 income-splitting rules. The definition of “pension income” for such purposes references a “life annuity,” and such top-up payments would not qualify as being part of an annuity, i.e., a series of periodic payments.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118 - Subsection 118(7) - Pension Income - Paragraph (a) - Subparagraph (a)(i) required top-up payments to satisfy the minimum-amount IPP rules do not qualify for income-splitting 272

5 October 2012 Roundtable, 2012-0453151C6 F - fractionnement de revenu de pension

last RRIF annuitant inclusion on death under s. 146.3(6) does not qualify for splitting

At the time of his death, Mr. X held a registered retirement income fund ("RRIF") with an FMV of $200,000. Under Mr. X's will, his son is a beneficiary of the RRIF. The liquidator of Mr. X's succession wishes to split the RRIF benefit with Ms. X. Is this permitted? CRA responded:

Under subsection 146.3(6), the last annuitant under a RRIF will be deemed, upon death, to have received, immediately before death, an amount out of or under a RRIF equal to the FMV of the property of the fund at the time of the death.

…[A]n amount deemed received by virtue of subsection 146.3(6) is not a payment under a RRIF for the purposes of the definition of "pension income" in subsection 118(7). Consequently, an amount deemed received by virtue of subsection 146.3(6) is not eligible for pension income splitting permitted by virtue of section 60.03.

Split-Pension Amount

Administrative Policy

29 October 2015 External T.I. 2015-0589051E5 F - Pension income splitting and bankruptcy

election available where pensioner or pension transferee is bankrupt/apportionment of split-pension amount

CRA confirmed that a joint s. 60.03(1) election can be made by a pensioner (Mrs.) and a pension transferee (Mr.) in the situation where the pensioner become a bankrupt, say, on June 1, 2015 or, alternatively, the pension transferee became bankrupt on that date.

CRA noted that s. 128(2) does not exclude the joint s. 60.03 election, nor the inclusion or deduction under ss. 56(1)(a.2) and 60(c). Because the split-pension election relates to the 2015 taxation year, it is possible for pensioner and a pension transferee to jointly elect for each of her or his pre-bankruptcy and post-bankruptcy taxation years, providing the conditions stated in section 60.03 are met. The split-pension amounts deducted in the pensioner’s returns filed for her pre-bankruptcy and/or the post-bankruptcy taxation year(s) under s. 60(c) should be reported as income on the pension transferee’s return for calendar 2015 under s. 56(1)(a.2). If it is the pension transferee who became bankrupt, the split-pension amount deducted by the pensioner should be apportioned between the pre-bankruptcy and the post-bankruptcy taxation years of the pension transferee, based on the eligible pension income received in each such taxation year. In such a situation, the split-pension amount that relates to the post-bankruptcy taxation year of the pension transferee will generally be reported on the return filed by him as bankrupt under s. 128(2)(f).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 128 - Subsection 128(2) - Paragraph 128(2)(f) s. 60.03 deductions/inclusions still available 64

4 November 2009 External T.I. 2009-0337451E5 F - Fractionnement de revenu de pension

RRSP annuity not eligible for splitting

Can a pensioner under age 65 split a pension received under his RPP and an annuity under his RRSP in the year of the death of the pension transferee (his spouse aged 66)?

CRA indicated that only the RPP income, which was "qualified pension income" as defined in s. 118(7)(a), could be split. The pensioner's RRSP income was not received as a consequence of the death of the pensioner's spouse or common-law partner as required by s. 118(7)(b) of "qualified pension income."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 118 - Subsection 118(7) - Qualified Pension Income RPP pension, but not annuity paid out of his RRSP, was eligible as qualified pension income of pensioner for s. 60.03 splitting 139

Subsection 60.03(2)

Administrative Policy

29 April 2020 External T.I. 2020-0845211E5 - Pension income splitting

s. 60.03 permits transferring pension income to the higher-income spouse

In order to reduce the fees (based on net income for ITA purposes) incurred by the lower-income spouse at a retirement home, can that spouse transfer 1/2 of their eligible pension income to the higher-income spouse? CRA responded:

The pension income splitting rules are typically used by couples to allocate pension income from the higher-income individual to the lower-income individual so as to reduce their total combined income tax payable. However, there is nothing in these rules that would prevent allocating pension income in the opposite direction (that is, from the lower-income individual to the higher-income individual).