# form T1032 "Joint Election to Split Pension Income for 2016



## semigeezer (Oct 21, 2014)

OK folks, first time figuring out form T1032 "Joint Election to Split Pension Income for 2016" and the Federal worksheet for line 314. I turned 65 and my wife turned 63 in 2016. I received withdrawals from an RRSP and payments from a RIF/LIF in 2016 and realize that CPP & OAS do not qualify for splitting.

Q1: On the Federal worksheet, I can put the RIF/LIF payment on line 1 but can I put the RRSP withdrawals on line 7? The preamble says "Annuity payments...". This will affect the maximum amount capable of being transferred. At this point, I think not.

Q2: I realize that I will be able to make the line 314 credit for pension income, but I don't think my wife can (she has no other pension/annuity/RIF/LIF receipt at this time) . On form T1032, step 4, note 2b, sub-note 1, it appears that my sources for eligible amounts are negated for her (i.e. would result in double dipping?).

Comments welcome.


----------



## AltaRed (Jun 8, 2009)

From http://www.taxplanningguide.ca/tax-planning-guide/section-2-individuals/pension-income-splitting/ it appears that RRSP withdrawals do not qualify


> To qualify for income splitting, the pension income must satisfy certain criteria. If you’re 65 years of age or older, eligible pension income includes lifetime annuity payments under a registered pension plan (RPP), a Registered Retirement Savings Plan (RRSP) or a deferred profit sharing plan (DPSP), and payments out of or under a Registered Retirement Income Fund (RRIF). If you’re under 65 years of age, eligible pension income includes lifetime annuity payments under an RPP and certain other payments received as a result of the death of your spouse or common-law partner. Eligible pension income doesn’t include payments under the Canada Pension Plan (CPP) or OAS payments.


See further this quote


> Tax tip: If you don’t already benefit from the pension income tax credit and you’re 65 years of age or older, consider creating pension income by purchasing an annuity that yields $2,000 of interest income annually. Alternatively, you can use some of the funds in your RRSP to purchase an annuity or RRIF to provide you with $2,000 of annual pension income.


from http://www.taxplanningguide.ca/tax-planning-guide/section-2-individuals/pension-credit/ You would have had to RIF X amount from your RRSP and then taken out all, or most of X, out of the RIF.


----------



## semigeezer (Oct 21, 2014)

I did set up a RIF/LIF in order to qualify for the pension income deduction, and it is this amount that I believe qualifies for splitting. However, I also made RRSP withdrawals in 2016 before converting to RIF/LIF and it is this initial amount that I'm not sure about qualifying for splitting. As I said, I don't think it does but your first link says (bolding is mine):

"_To qualify for income splitting, the pension income must satisfy certain criteria. If you’re 65 years of age or older, eligible pension income includes lifetime annuity payments under a registered pension plan (RPP), *a Registered Retirement Savings Plan (RRSP)* or a deferred profit sharing plan (DPSP), and payments out of or under a Registered Retirement Income Fund (RRIF). _"

so, are RRSP "withdrawals" considered "payments", unfortunately I think not. I don't understand why not but this is what I'm trying to clarify.

The same link says "....... Both of you can claim the pension income credit". So that seems to answer my second question so I'll have to review form T1032, Step 4 again.


----------



## semigeezer (Oct 21, 2014)

I read something else that indicates RRSP income would be shown in box 16 of T4RSP while RRSP withdrawals are shown in box 22, so for whatever reason they seem to be dealt with differently. I guess I should have converted to RIF/LIF before making any withdrawals in 2016, oh well, no major problem.

I had to post this as a separate post because using "edit" didn't give a save button. ??????


----------



## AltaRed (Jun 8, 2009)

semigeezer said:


> "_To qualify for income splitting, the pension income must satisfy certain criteria. If you’re 65 years of age or older, eligible pension income includes lifetime *annuity payments* under a registered pension plan (RPP), *a Registered Retirement Savings Plan (RRSP)* or a deferred profit sharing plan (DPSP), and payments out of or under a Registered Retirement Income Fund (RRIF). _"
> 
> so, are RRSP "withdrawals" considered "payments", unfortunately I think not. I don't understand why not but this is what I'm trying to clarify.


I think my underlined/bolded part is very clear. An RRSP withdrawal is NOT an annuity payment. My second link tells you to RIF the amount you want to claim as pension income and withdraw from the RIF. I recall this having been discussed in forums before. 

I think your under age 65 age spouse should qualify for the pension income credit if you are splitting pension income with her.... The way to find out is to run scenarios through some tax software. I've often done 'what if' analysis with tax sofftware such as Studio Tax, etc. to find out.


----------

