How to Income Split with the Canada Pension Plan (CPP)

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Useful information for couples who: (a) will get CPP, and (b) would rather pay less tax.

This 5 minute video shows how it might be possible to income split with the Canada Pension Plan.

We also introduce an elevator-and-pulley analogy to help visualize marginal tax rates. Our creative visuals simplify the complex CPP calculations that get done when figuring it all out.

If you can split income with your partner, you might be able to pay less total tax as a couple.

This is achieved if you can shift income from the family member who’s in a higher tax bracket, to the other family member who’s in a lower tax bracket.

For your money from the Canada Pension Plan, the rule that might let you income split is called Assignment. Assignment means that you are able to assign, or transfer, a part of your CPP retirement pension to your spouse. And at the same time, your spouse assigns a part of their CPP retirement pension to you.

This mutual transfer might result in income splitting.

It’s also important to know that your CPP retirement pension is taxed as regular income. Money from CPP is added to your other taxable income to figure out your Total Taxable Income.

You have to figure out three things to know if CPP Assignment will result in income splitting for your situation:
1. The portion of your CPP pension that can be mutually assigned with your spouse.
2. There needs to be a large enough difference between your CPP retirement pension, and your spouses CPP pension.
3. Other sources of income and your tax rates.


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