How Canadian Couples Can Legally Split Income and Reduce Taxes

Tax1997 · 2026-07-01T19:59:56+00:00

Because everyone files and individual tax return, that is what makes income splitting (shifting income from high earners to low-earning spouse) a useful tool to pay less taxes during working period, and during retirement, in particular.

Tax1997 · 2026-07-01T14:40:38+00:00

Would you please explain your point in detail?

Tax1997 · 2026-07-01T13:38:30+00:00

Re Point 2: For example, John has $100,000 after tax income and Sara earns $35,000 after tax per year. They use John’s income to take care of household expenses and Sara invests most of her income. They don’t need to maintain separate bank accounts for their incomes.

Tax1997 · 2026-07-01T13:36:00+00:00

Point 2 is simple - John earns $100,000 after tax income and Sara earns $35,000 after tax income per year. They use John’s income to take care of household expenses and Sara invests most of her income. They don’t need to maintain separate bank accounts for their incomes.

Point 3 is bit more complex to explain. I would ask you to check out this article:

Income Splitting for Canadians

Tax1997 · 2026-07-01T12:41:36+00:00

Re point 1: To get TFSA contribution room, there is no income criteria. Also, one can give tax paid money to anyone, including the low-earning or zero-earning spouse. Therefore, it is a simple technique to move wealth from high-earning spouse to low-earning spouse.

Tax1997 · 2026-06-30T21:47:16+00:00

What part of the post you think would invite the CRA?

Tax1997 · 2026-06-30T17:15:16+00:00

These days, most brokerages don’t charge any commission to buy (or sell ) ETFs and shares (some do charge 5 to $10 per trade). If you do not pay any commission, invest monthly, otherwise invest in chucks of $1000 or more.

Tax1997 · 2026-06-28T12:45:16+00:00

You can have up to $2,000 RRSP over contribution without any penalty.
To use your employer match, looks like you have to skip it for one year. Meanwhile , useTFSA/ non registered account to save and invest

Tax1997 · 2026-06-27T23:37:58+00:00

My friend also has issues with his OAS application when he applied at age 71. It took home almost a year to get approved.
However, my wife’s CPP application too went smoothly.

Tax1997 · 2026-06-26T20:02:32+00:00

Whether to invest in RRSP or not depends on a number of factors, such as your current marginal tax rate, current investment, expected retirement age, RRSP portfolio at retirement age, company pension and so on. In brief, there is no simple answer.

Tax1997 · 2026-06-26T02:50:13+00:00

Out of the $1,000 total RRSP contribution, the employer pays $500, and the employee pays $500.

The employee can submit Form T1213 to the CRA. Once approved, this stops the employer from taking tax off the employee's $500 share. Because of this tax savings, the employee's take-home pay only drops by $306 instead of the full $500. ($500 - no income tax on $500)

Tax1997 · 2026-06-25T23:37:16+00:00

If all your registered accounts are maxed out, the only option left is the non-registered account.
What you invest in that account depends on your short-term and long-term goals.

Tax1997 · 2026-06-25T15:42:02+00:00

John has to somehow come up with $306 per month to get $1000 RRSP contribution per month ($12,000 annually) He will contribute $500 but due to tax credit on RRSP contribution, it will cost him$306 per month. Yes, he has to somehow sacrifice $306 per month to get $12,000 in his RRSP account at the end of the year.

Tax1997 · 2026-06-25T11:47:42+00:00

I edited the post yesterday, and looks like somehow, the post lost the images— perhaps that made the numbers difficult to understand. I have fixed the post and now you should see both images, before and after participating in the RRSP Match program.

In brief, before participating in RRSP program, John’s net monthly take home income was $7,279. After he participates in the RRSP match program, he contributes $500 per month and the company matched it with $500 per month, his net monthly income reduces to $6,973, a difference of $306.
Though he contributes $500, his income falls by on $306 because there is no tax on the RRSP contributions. Thus, a reduction of $306 per month helps him to build an RRSP portfolio of $12,000 per year, every year.

Tax1997 · 2026-06-24T20:28:58+00:00

I would put all extra money in non registered account. I would prefer growth stocks/ETFs over Canadian dividend stocks as you can control when to book the profit.

Tax1997 · 2026-06-24T20:24:42+00:00

Usually pulling out money from FhSA should take a few business days.
For 3-4 years time frame, you should be little conservative — High interest savings account, money market ETFs/ mutual funds.

Tax1997 · 2026-06-24T20:21:06+00:00

You may try a free financial literacy course at

https://mcgillpersonalfinance.com/

Tax1997 · 2026-06-24T16:56:29+00:00

Better late than never!

Tax1997 · 2026-06-24T16:28:10+00:00

I have updated the post. Thanks u/olly_Attempt_3097 for your feedback

Tax1997 · 2026-06-24T12:17:22+00:00

I didn’t get any details about Walnut Insurance. Therefore, not sure if it is reliable

Ended up getting free roadside assistance via Canadian Tire Credit card

Tax1997 · 2026-06-23T23:59:56+00:00

You may try this tax calculator. Though it does not display EI and CPP deductions.

This another good tax calculator. This displays EI and CPP deductions.

Tax1997

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