Personal Income Tax -> Income Splitting
Why Split Income With a Spouse?
By splitting income with a spouse, the higher income taxpayer can reduce net income and taxable income. The benefits of this include
If both spouses are in the same tax bracket, income splitting will not provide the benefit of a reduction in the marginal tax rate. However, pension splitting may still be useful if it creates or increases a pension tax credit for the spouse.
See our articles on different methods of income splitting:
Transfer dividend income to a spouse - In some circumstances, Canadian dividend income may be included in the income of either spouse.
Transfer capital losses to a spouse - using superficial loss rules
Spousal RRSPs and RRIFs, and attribution rules
Family Tax Cut (FTC) - 2014/2015 only - non refundable tax credit for spouses with children under 18, "notional" income splitting
Other income-splitting ideas:
If you are self-employed, you can employ your spouse or your children. The spouse or children must be paid a reasonable wage for services performed. See also Don't pay unnecessary unemployment insurance premiums on our Small Business page.
If both spouses are earning income, but one is in a much higher tax bracket, the lower income spouse could invest all earnings, while household and other expenses are paid by the higher income spouse.
Revised: October 20, 2021
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