CAPS/RCPP
Canadian
Activists for Pension Splitting
Regroupement
des Canadiens pour le partage des pensions
We are a group of citizens from across
Our rationale for doing this included the
desire to correct the unfair situation whereby some unequal-income couples
could greatly reduce their taxes in retirement by using spousal RRSPs and other
means, while other unequal-income couples were much less able to reduce their
taxes by such means. Pension
splitting finally provides an element of fairness and justice for past
discrimination against women in the workplace, and recognition of their
contribution as homemakers.
After years of lobbying by individuals
and organizations, helped by politicians and officials who saw the fairness in
pension splitting, on June 22, 2007, pension splitting became income tax law.
Nevertheless, it is not impossible for a
government to alter the legislation in the future. Therefore we urge concerned citizens to
check back to this website occasionally, and also to the website of the Common Front
for Retirement Security (link below).
If it happens that pension splitting is threatened
in whole or in part by some political or bureaucratic turn of events, please
contact your federal member of Parliament (see link to list of MPs, below) and
express your concern.
The provincial portion of Canadians’
income tax is calculated on the basis of the federal taxable income, by which
point on the tax return the splitting is already complete. However, since the provinces have
differing formulas for the provincial portion of the tax return, the tax relief
from pension splitting will vary somewhat from province to province.
Pension splitting
briefly explained: Pension splitting is
optional and was a completely new procedure in tax year 2007 done by spouses
simply on their income tax returns.
The couple can choose to do it, or not, each year. It does not require that they
actually split their pensions with each other like with CPP/QPP, but is
done just on their income tax returns.
Not all kinds of retirement income are eligible for this splitting, and
there are age requirements as well (see links below for details). The result is a lowering of the total
income tax the couple must pay, in many cases by thousands of dollars per year. In the past, some couples have been able
to lower their taxes in similar ways, like spousal RRSPs, or one spouse
employing the other, but now all couples with eligible retirement income have
these tax savings available to them.
Please click on the
links below for more information:
Canada revenue agency web page on Pension
income splitting:
http://www.cra-arc.gc.ca:80/tx/ndvdls/tpcs/pnsn-splt/menu-eng.html
An
explanation of the effect of the pension splitting legislation on Old Age
Security benefits.
Pension splitting can reduce provincial
subsidy for nursing home rent. An
article by columnist James Daw gives an example from Ontario:
http://www.thestar.com/article/486725
List
of MPs in Canada, and their contact information.
List of organizations that comprised the
Common Front for Pension Splitting.
CAPS/RCPP has members across
CAPS/RCPP offers this information without
guarantee of accuracy and accepts no responsibility for decisions, actions or
outcomes based on it.
This web page was updated 2009-10-24