RRSP Centre

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RRSP Centre

Spousal RRSP
Most Canadians are aware of the benefits of investing in an RRSP and take advantage of the opportunity to make regular contributions. However, relatively few individuals invest in a Spousal RRSP; as a result, the majority miss out on one of the few income splitting opportunities still available for Canadian taxpayers.

What is a Spousal RRSP?
A Spousal RRSP is the same as a regular RRSP, except that a Spousal RRSP is registered in your spouse's or common-law partner's (hereinafter referred to as a 'spouse') name while you, as the contributing spouse, take a full tax deduction for all the contributions you make to the spousal plan.

How Much May I Contribute to a Spousal RRSP?
Deposits made to a Spousal RRSP cannot exceed your personal contribution limit. Your contribution can be made to a Spousal RRSP, your personal RRSP, or split between the two plans. Deposits made to a Spousal RRSP do not affect your spouse's RRSP contribution limit for the year.

Why Contribute to a Spousal RRSP?
The primary reason for establishing a Spousal RRSP is to allow for income splitting at some time in the future, usually retirement. This is accomplished as a result of the assets in a Spousal RRSP being considered the property of the planholder (your spouse). Although there are some restrictions, when funds are withdrawn from the RRSP they are taxed in the hands of your spouse, at your spouse's marginal tax rate.

The most advantageous scenario for a Spousal RRSP occurs when the planholder would otherwise have little retirement income, while the contributing spouse would have a significant amount of income.

For more information, contact an Investment Advisor at a BMO Nesbitt Burns branch near you.

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