T1032: Joint election to split pension income

What’s in this article?

 

What is this?

Form T1032 is used if you (the pensioner) are electing to split your eligible pension income with your spouse or common-law partner (the pension transferee).

You can split up to 50% of your eligible pension income with your spouse or common-law partner. In order to split pension income, both you and your spouse or common-law partner must complete and file form T1032. Note that, the information on both forms must be the same.

Click this link to see a guide around splitting pension income.

You can only file one joint election for the tax year. If both you and your spouse or common-law partner have eligible pension income, you must decide which one of you will elect to split the pension income with the pension transferee.

If you are a Québec resident, complete Schedule Q: Retirement Income Transferred to Your Spouse to transfer your eligible retirement income to your spouse.

 

Am I eligible?

If you received eligible pension income in the year and want to split it with your spouse or common-law partner, you must use form T1032.

In order to qualify for pension income splitting, you must meet the following conditions:

  • You must be married or in a common-law partnership with each in the year;
  • You were not living separate due to a breakdown in a relationship at the end of the year and for 90 days or more;
  • You were both residents of Canada on December 31 or if deceased, resident in Canada on the date of the death. If you were bankrupt in the year, you must be resident in Canada on December 31 of the year in which the tax year, pre or post-bankruptcy, ends; and
  • You received eligible pension income or you were 65 years or older and received qualifying amounts distributed from a retirement compensation arrangement (Box 17 of your T4A-RCA slips).

Canada Revenue Agency (CRA) says…

Eligible pension income is generally the total of the following amounts received by the pensioner in the year (these amounts also qualify for the pension income amount):

  • the taxable part of life annuity payments from a superannuation or pension fund or plan; and
  • if they are received as a result of the death of a spouse or common-law partner, or if the pensioner is 65 years of age or older at the end of the year:
    • annuity and registered retirement income fund (including life income fund) payments;
    • registered retirement savings plan (RRSP) annuity payments; and
    • certain qualifying amounts distributed from a retirement compensation arrangement.

The following amounts received by the pensioner are not eligible for pension income splitting:

  • old age security payments;
  • Canada Pension Plan, Quebec Pension Plan;
  • any foreign source pension income that is tax-free in Canada because of a tax treaty that entitles you to claim a deduction at line 256;
  • income from a United States individual retirement account (IRA); or
  • amounts from a RRIF included on line 115 and transferred to an RRSP, another RRIF or an annuity.

 

Revenu Québec says…

If you were born before January 1, 1950, and had a spouse on December 31, you and your spouse (regardless of his or her age) can jointly decide to include up to 50% of your eligible retirement income for the year in the calculation of your spouse's income.

Eligible retirement includes payments you received from a pension plan, an RRSP, a RRIF (including a life income fund (LIF)), a DPSP or a PRPP (including a VRSP), annuities, and amounts received as life annuity payments under a retirement compensation arrangement (if certain conditions are met).

Note: If you are transferring retirement income to your spouse, you must also transfer the corresponding Québec income tax (including the health contribution) withheld from that income.

 

Where do I claim this?

Important: To make a joint election to split pension income, you and your spouse or common-law partner must file your tax returns together.

1. Click the PREPARE tab.
2. Click the YOUR YEAR IN REVIEW icon. You will find yourself here:


3. Select the checkbox I received retirement income or I was retired or over 65.
4. Scroll to the bottom of the page and click Continue.
5. You will find yourself on the PREPARE tab. Click the RETIREMENT INCOME icon.
6. Under the TRANSFERS AND CREDITS section, select the checkbox for Joint election to split income (T1032).
7. Scroll to the bottom of the page and click Continue.

When you arrive at the page for Split pension income, enter your information into the tax software.

 

Still not sure? Ask an expert!

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Where can I learn more?