Principal Issues: Is the splitting of pension income permitted under the Income Tax Act?
Position: Not currently, but will be permitted beginning in 2007.
Reasons: Announced by the Minister of Finance on Oct. 31, 2006, that Canadian resident taxpayers who receive pension income that qualifies for the existing pension tax credit will be permitted to allocate to their resident spouse or common-law partner up to one-half of that income.
Signed on December 4, 2006
XXXXXXXXXX
Dear Colleague:
Thank you for your letter received on November 9, 2006, and the attached correspondence from your constituents, XXXXXXXXXX, concerning the splitting of pension income for income tax purposes.
I am pleased to advise that on October 31, 2006, the Honourable James M. Flaherty, Minister of Finance, announced a major change in tax policy for pensioners. In the backgrounder released with the announcement, it indicates that beginning in 2007, Canadian resident taxpayers who receive income that qualifies for the existing pension income tax credit will be permitted to allocate to their resident spouse or common-law partner up to one-half of that income.
I trust that this will assist you in responding to your constituents.
Sincerely,
The Honourable Carol Skelton, P.C., M.P.
Gary Allen
952-9853
November 23, 2006
2006-021495