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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
 | reducing the taxpayer's marginal tax rate (and possibly increasing the spouse's marginal rate) |
| reducing or eliminating OAS clawback |
| creating a pension tax credit for the spouse (with pension splitting) |
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:
Sharing your CPP retirement pension with a spouse
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
Lend money to your spouse or child
Family Tax Cut (FTC) - 2014/2015 only - non refundable tax credit for spouses with children under 18, "notional" income splitting
Other income-splitting ideas:
Filing Tax Returns When You Have a Spouse
Includes
| Claiming tax credits and deductions with a spouse |
| Reporting/allocating investment income earned in a joint account |
Split Income by Employing Your Spouse or Child
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.
Have the Lower Income Spouse Invest All Earnings
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.
Government of Quebec Resources
Splitting Income to Save on Taxes
Revised: September 20, 2024