I - Order to draw on your assets: The most tax efficient strategy when both spouses have both registered and unregistered retirement savings is to draw on the assets in the following order:

• the unregistered assets of the spouse with the higher income;
• the unregistered assets of the spouse with the lower income;
• the registered assets of the spouse with the lower income;
• the registered assets of the spouse with the higher income.

This strategy equalizes, to the greatest extent possible, the income of spouses, while also maintaining the tax-deferral opportunity provided by the registered pans.

II - Spousal RRSPs: By making spousal RRSP contributions, the higher income earning spouse is not only making sure that they have more balanced incomes during retirement, but he/she also realizes a larger benefit on the contribution because of his/her higher marginal tax rate.

III - CPP Assignment?: The assignment of CPP retirement pension benefits between spouses is one of the few income splitting tools still available. A couple can share a portion of their retirement pension based on the length of their relationship in comparison to their total contributory period. By assigning a couple’s CPP pensions, the higher earning spouse has legitimately shifted some income to the lower income-earning spouse, thus reducing federal income tax payable.

IV - Pension Credits: A federal tax credit of 16%, and provincial tax credits of various rates, can be claimed on up to $1000 of eligible pension income. The definition of eligible pension income depends on whether the taxpayer has reached age 65 before the end of the taxation year. For those who have reached age 65, eligible pension income includes pension payouts from registered pension plans or deferred profit sharing plans that are received as an annuity, as well as annuity payments resulting from RRSPs. It, also, includes the income element of payments from an unregistered annuity, and payments from a RRIF. For those who have not reached age 65, the definition is more restrictive, and only includes annuity payments from registered pensionplans; or annuity payments resulting from RRSPs, RRIFs, DPSPs, or RPPs as a result of the death of the taxpayer’s spouse; or the income element of an unregistered annuity payment arising upon such a death.