# tax deduction and spousal rsp for at-home mom



## joncnca (Jul 12, 2009)

we're expecting in january, and my wife will likely be staying home with the child for the next 2-3 years at least. we have a good 30+ years before retirement, but i want to plan ahead.

because my wife will stop working, i've been thinking about spousal rsps lately. she's had a pension for longer than me, which ate up most of her rsp contribution room. i, however, have some $20,000 in unused contribution room. she also has some money in cash and non-registered accounts.

i'm wondering if this is possible and/or prudent:

in addition to my own contributions to her spousal rsp, can she gift me a lump sum that i then contribute to her spousal rsp? this uses up some of my rsp contribution room, but she gets more money in her spousal rsp, and i get a tax refund that we can use for whatever purpose (probably baby, i hear those are expensive). 

*her money has already been taxed, so gifting it to me should not invoke income tax, even if i'm using it to make a contribution to a spousal rsp in her name, right?*

thanks!


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## stardancer (Apr 26, 2009)

When my husband and I were still contributing to RRSPs, I never worried about whose $$ went into what RSP (mine or his or spousal). Most of our money was 'household' money that paid bills and did the saving. Never got questioned on it by CRA whether I was working or not. The only thing to watch out for is withdrawing from the spousal RSP before 3 years have passed since the last contribution. The attribution rules no longer apply after the 3 year limit.


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## OptsyEagle (Nov 29, 2009)

*her money has already been taxed, so gifting it to me should not invoke income tax, even if i'm using it to make a contribution to a spousal rsp in her name, right?*

`````````````

That is fine. Your wife can gift as much money to you as she wants. Attribution rules only surround the issue of you using it to earn taxable income. By putting it inside a registered plan (either yours or hers) there will be no taxable income and therefore no problem.

Knock yourself out.


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## wendi1 (Oct 2, 2013)

You just have to make sure that the money, when it goes into the RRSP, comes from YOUR bank account. Some of the brokers/banks get a bit sticky about this (as I discovered).

Congratulations on the baby!


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## OhGreatGuru (May 24, 2009)

Whether you put it into a spousal RRSP or your own RRSP has more to do with what your respective income projections are for retirement. The tax deduction to you is the same whichever you choose. Balancing retirement income between spouses is less important than it used to be, now that pension income can be split between spouses. However, if you expect that your pension will ultimately be more than hers, whether due to salary differences or due to the interruption of contributory years while she is a stay-at-home Mom, the spousal RRSP is worth considering.


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## joncnca (Jul 12, 2009)

thanks, everyone, for your kind replies. clears things up for me a lot. 

we have separate accounts, it's just how we had it set up. we try to live on my income, so that's why it's not a joint account. i trust her  and we won't be withdrawing anything anytime soon. i'll be sure the contribution gets made from my bank account.

wendi1, thanks for the congrats =)

OhGreatGuru, i remember coming by something about splitting pension but didn't look into it further. if that's true, then that'll help to equalize our income at retirement. her expected interruption and our salary differences will mean her expected retirement income should be lower than mine, perhaps even substantially.


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## Mookie (Feb 29, 2012)

OptsyEagle said:


> `````````````
> Attribution rules only surround the issue of you using it to earn taxable income. By putting it inside a registered plan (either yours or hers) there will be no taxable income and therefore no problem.


Are you sure about this? What about when you withdraw the RRSPs? That would be taxable income. Can you show me a link to the CRA that says this is ok?


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## MoneyGal (Apr 24, 2009)

http://www.cra-arc.gc.ca/E/pub/tp/it307r4/it307r4-e.txt

Amounts to be Included in Income 

Paragraph 6. Generally, any amount received by a taxpayer out of the 
taxpayer's own RRSP is the taxpayer's income, and any amount received by the 
taxpayer's spouse or common-law partner out of the spousal and partner RRSP is 
income of the spouse or common-law partner. *This is so even though the 
taxpayer may have made part or all of the contributions to the spousal and 
partner RRSP. *


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## OptsyEagle (Nov 29, 2009)

Mookie said:


> Are you sure about this? What about when you withdraw the RRSPs? That would be taxable income. Can you show me a link to the CRA that says this is ok?


Yes. You will have a problem if you withdraw money from the spousal RRSP within 3 years of a contribution. My point was pertaining to the gift of the RRSP contribution itself. There will be no problem with that. I will let you find your own links, or you can simply choose to ignore my advice.


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## MoneyGal (Apr 24, 2009)

Comprehensive link is above, in my post. I liked to the interpretation bulletin on spousal RRSPs. I also pasted the relevant para.


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## Mookie (Feb 29, 2012)

MoneyGal said:


> http://www.cra-arc.gc.ca/E/pub/tp/it307r4/it307r4-e.txt
> 
> Amounts to be Included in Income
> 
> ...


Thanks very much MoneyGal! What about if I were to contribute my money to my wife's regular (non-spousal) RRSP? Are there attribution rules that would prevent this?


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## OptsyEagle (Nov 29, 2009)

Mookie said:


> Thanks very much MoneyGal! What about if I were to contribute my money to my wife's regular (non-spousal) RRSP? Are there attribution rules that would prevent this?


No. Because she will be receiving the tax deduction for the contribution.


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