Filing Your Return -> Personal Income Tax -> Income Splitting -> Transfer Dividend Income to a Spouse
Transfer of Income From Taxable Canadian Dividends to a Spouse
Income Tax Act s. 82(3)
A taxpayer who is entitled to the spousal tax credit for his/her spouse or common-law partner may include all of the spouse's dividends from taxable Canadian corporations in his/her income. This option is only available if doing so will allow the taxpayer to claim, or increase the claim, for the spousal tax credit. There is no option to include only part of the spouse's dividends.
There is no special form to fill out to do this. The spouse's dividends would just be included on the taxpayer's income tax return.Transferring the dividends may not always be beneficial. Taxes payable should be calculated both ways (with and without the transfer), in order to determine which method results in lower taxes. You can use our Canadian Tax Calculator to help with this analysis.
If the spouse has incurred deductible interest expense in order to earn the taxable dividends, the interest expense deduction is not transferred to the taxpayer. It may be used by the spouse to reduce other income. If the interest expense exceeds other income, a non-capital loss is created.
If the spouse with the dividend income is a student, the transfer of the dividend income to the taxpayer can sometimes be very beneficial, and may also result in a partial transfer of the tuition/education amounts to the taxpayer.
TaxTips.ca Resources
Interest Expense on Money Borrowed to Purchase Investments - re joint lines of credit and joint investment accounts
Attribution Rules re Gifts, Transfers, or Loans to a Spouse or a Related Minor Child - re investments held jointly with spouse
Canada Revenue Agency (CRA) Resources
Line 12000 (line 120 prior to 2019) - Taxable amount of dividends from taxable Canadian corporations.
Tax Tip: Try to arrange your finances so that both spouses have equal income before and after retirement.
Revised: October 26, 2023