Its your Money Keep It

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Its your Money Keep It!
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Two tax-saving strategies

• Income splitting
• Pension income tax credit

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Income Splitting
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Now available for income splitting

• Married common law couples
• Spouses can split retirement income
• Save thousands in taxes each year
• Have up to 50 eligible income transferred to
  lower income spouse

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Eligible

• Life annuity payments from a Registered Pension
  Plan (RPP)
• Annuity payments from a Registered Retirement
  Savings Plan (RRSP)
• Withdrawals from a Registered Retirement Income
  Fund (RRIF)
• Annuity and installment payments out of a
  Deferred Profit Sharing Plan (DPSP)

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Eligible, continued

• Income from some foreign pension arrangements and
  U.S. Individual Retirement Accounts (IRAs)
• The interest element of a non-registered annuity
  contract (prescribed and non-prescribed)
• Accrued (interest) income from a non-registered
  deferred annuity contract such as a Guaranteed
  Investment Contract (GIC) provided by an
  insurance company

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Not eligible

• Old Age Security (OAS)
• Canada / Quebec Pension Plan (CPP / QPP)
• Lump-sum death benefits
• Retiring allowances

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Not eligible, continued

• Salary deferral arrangements, retirement
  compensation arrangements, employee benefit plans
  and employee trust plans
• Gains resulting from a policy loan or disposition
• Capital gains, dividends and interest

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Income splitting options

• Eligible income
• Canada/Quebec Pension Plans
• Spousal RRSPs

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Eligible income

• Split up to 50
• Optimum transfer may be less than 50

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Canada/Quebec Pension Plans

• Spouses of at least 60 years of age can share up
  to 50 of benefits earned while living together

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Spousal RRSPs

• Income splitting at any age
• Not restricted to 50
• Younger spouse delayed until the year after
  spouse reaches age 71

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Example 1
For illustrative purposes only.
1 Taxes owing are calculated using graduated
rates for the province of British Columbia taking
into account the Basic Personal Exemption and the
Pension Income Credit (367) if applicable.
Generally others will also apply. 2 The Age
Credit is 1,034 less clawbacks.
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Example 2
For illustrative purposes only.
1 Taxes owing are calculated using graduated
rates for the province of British Columbia taking
into account the Basic Personal Exemption and
the Pension Income Credit (367) if applicable.
Generally others will also apply. 2 The Age
Credit is 1,034 less clawbacks. 3 Even though
under age 65, Elaine now has a Pension Income
Credit on the transferred company pension income.
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The Pension Income Tax Credit
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Reduce taxes even more

• Even at age 65 or older
• Available even without income from RRIF or
  private pension

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Pension income tax credit

• Deduct a tax credit equal to 15.5 on first
  2,000
• Up to 310 in federal tax savings
• Plus provincial tax credits
• Non-refundable

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Eligible

• Life annuity payments from a Registered Pension
  Plan (RPP)
• Annuity payments from a Registered Retirement
  Savings Plan (RRSP)
• Withdrawals from a Registered Retirement Income
  Fund (RRIF)
• Annuity and installment payments out of a
  Deferred Profit Sharing Plan (DPSP)

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Eligible, continued

• Income from some foreign pension arrangements and
  U.S. Individual Retirement Accounts (IRAs)
• The interest element of a non-registered annuity
  contract (prescribed and non-prescribed)
• Accrued (interest) income from a non-registered
  deferred annuity contract such as a Guaranteed
  Investment Contract (GIC) provided by an
  insurance company

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Not eligible

• Old Age Security (OAS)
• Canada / Quebec Pension Plan (CPP / QPP)
• Lump-sum death benefits
• Retiring allowances

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Not eligible, continued

• Salary deferral arrangements, retirement
  compensation arrangements, employee benefit plans
  and employee trust plans
• Gains resulting from a policy loan or disposition
• Capital gains, dividends and interest

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Creating the income from an insurance GIC
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Income splitting where both spouses are age 65 or
more

• Invest double the amount of non-registered
  savings
• Make an election on tax returns to each claim
  2,000
• Maximize tax benefits of the 2,000
• Double your tax credits

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Transferring unused credits to a spouse

• At least age 65
• Have eligible income but unable to use full
  credit
• Transfer unused portion to spouse
• Receiving spouse can claim at any age
• No eligible income required

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Speak to your advisor

• Income splitting and pension income tax credit
• Two ways to minimize tax during retirement
• Maximize your retirement income

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Important notes
The commentary in this presentation is for
general information only and should not be
considered investment or tax service to any
party. Individuals should seek the advice of
professionals to ensure that any action taken
with respect to this information is appropriate
to their specific situation. Manulife
Investments is the brand name identifying the
personal wealth management lines of business
offered by Manulife Financial and its
subsidiaries in Canada. As one of Canadas
largest integrated financial services providers,
Manulife Investments offers a variety of products
and services including segregated funds, mutual
funds, principal protected notes, annuities and
guaranteed interest contracts. Manulife and the
block design are registered service marks and
trademarks of The Manufacturers Life Insurance
Company and are used by it and its affiliates
including Manulife Financial Corporation.
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