Income Splitting Using Registered Plans

KNOWLEDGE EXPECTED OF: QAFP^® Professionals

Awareness The state of being aware that something exists / to have familiarity with a particular activity or subject		Understanding To comprehend the general relationship of particulars / to have an expertise with how something works	Application Ability to put information to use / to use knowledge for relevant, practical purposes					Evaluation To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define To state exactly the meaning of	Identify To be aware of / to recognize and correctly name / to locate an appropriate resource	Explain To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it	Determine To ascertain / to come to a decision, such as by investigation or reasoning	Compare To note the similarities and differences between two or more things	Estimate To determine an approximate value for	Calculate To find the value using mathematics	Convert To change from one form or purpose to another	Evaluate To reach a conclusion or make a through careful study	Interpret To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

Explain methods for splitting income using pension and registered plans, such as:

Contributing to a spousal Registered Retirement Savings Plan for which the taxpayer’s spouse or common-law partner is the annuitant
Gifting property to spouse or common-law partner to invest in a Tax-Free Savings Account
Contributing to a Registered Education Savings Plan for which the taxpayer’s child or grandchild is the beneficiary
Contributing to a Registered Disability Savings Plan for which the taxpayer’s child or grandchild is the beneficiary
Sharing Canada Pension Plan retirement pension income with spouse or common-law partner¹
Splitting eligible pension income with spouse or common-law partner²

Sharing Canada Pension Plan retirement pension income with spouse or common-law partner³
Splitting eligible pension income with spouse of common-law partner⁴

Explain the estimated income tax impact for each income-splitting method.
Determine how each of these factors may impact the suitability of investors splitting income:

Marginal tax rate differential between the taxpayer and annuitant
- In current year
- In future years when withdrawals are made, if applicable
Impact on net taxes paid by the taxpayer and annuitant
Income attribution rules
Potential impact on government benefits
Potential impact on government-sponsored savings plans, including grants and bonds
Potential impact on ownership of assets
Potential impact on creditor protection of assets
Cost and fees associated with implementing the strategy to split income

Evaluate how each of the factors may impact the suitability of splitting income using registered plans.

Awareness The state of being aware that something exists / to have familiarity with a particular activity or subject		Understanding To comprehend the general relationship of particulars / to have an expertise with how something works	Application Ability to put information to use / to use knowledge for relevant, practical purposes					Evaluation To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define To state exactly the meaning of	Identify To be aware of / to recognize and correctly name / to locate an appropriate resource	Explain To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it	Determine To ascertain / to come to a decision, such as by investigation or reasoning	Compare To note the similarities and differences between two or more things	Estimate To determine an approximate value for	Calculate To find the value using mathematics	Convert To change from one form or purpose to another	Evaluate To reach a conclusion or make a through careful study	Interpret To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

Explain methods for splitting income using pension and registered plans, such as:

Contributing to a spousal Registered Retirement Savings Plan for which the taxpayer’s spouse or common-law partner is the annuitant
Gifting property to spouse or common-law partner to invest in a Tax-Free Savings Account
Contributing to a Registered Education Savings Plan for which the taxpayer’s child or grandchild is the beneficiary
Contributing to a Registered Disability Savings Plan for which the taxpayer’s child or grandchild is the beneficiary
Sharing Canada Pension Plan retirement pension income with spouse or common-law partner¹
Splitting eligible pension income with spouse or common-law partner²

Sharing Canada Pension Plan retirement pension income with spouse or common-law partner³
Splitting eligible pension income with spouse of common-law partner⁴

Explain the estimated income tax impact for each income-splitting method.
Determine how each of these factors may impact the suitability of investors splitting income:

Marginal tax rate differential between the taxpayer and annuitant
- In current year
- In future years when withdrawals are made, if applicable
Impact on net taxes paid by the taxpayer and annuitant
Income attribution rules
Potential impact on government benefits
Potential impact on government-sponsored savings plans, including grants and bonds
Potential impact on ownership of assets
Potential impact on creditor protection of assets
Cost and fees associated with implementing the strategy to split income