Income Eligible for The Pension Income Tax Credit

by Tax Guy - Burlington Accountant on April 13, 2009 Print This Post Print This Post

You are a pensioner and have heard that you can split your pension income with your spouse.  Perhaps you know you file T1032 – Joint Election to Split Pension Income and how to report the amounts on return.  But what is eligible pension income anyway?

Eligible Pension Income

If you are age 65 of older in the tax year, eligible pension income includes any or all of the following types of pension income:

  • Life annuity payments from a superannuation plan or pension plan.  This will include amounts received from a life income fund (LIF) or a locked in retirement income fund (LRIF),
  • Payments from your RRIF,
  • Annuity payments from your RRSP,
  • Annuity payments from a deferred profit sharing plan (DPSP),
  • Certain types of payment that are the result of the termination of a deferred profit sharing plan, or
  • Regular annuities or income averaging contracts (IIAC).

If you are under the age of 65 in the tax year, your choices are very limited.  Income that qualifies for the pension tax credit includes the following:

  • Life annuity payments from a superannuation plan or pension plan. 
  • Payments received from a RRIF, annuity payments from an RRSP or DPSP, that are received as a result of your spouse or common law partners death.

Certain foreign pensions may also qualify for the pension tax credit and thus be split with your spouse.  These typically include foreign pension that is exempt under a tax treaty.

Source: Tax Tips

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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