Aim for equal retirement incomes (part 1)

Article Excerpt

This is part 1 of a two-part series on steps you and your spouse can take to cut your income-tax bills in retirement. We’ll publish the second part in our next issue. In many families, one spouse earns more money than the other. That, of course, puts the spouse with the greater income in a higher tax bracket. It also means that any extra money earned on investments, such as through capital gains, interest or dividends, is taxed at a higher rate. Revenue Canada won’t let the higher-income spouse simply give, or “gift,” money saved or invested to the lower-income spouse. “Attribution” rules apply if you do that. That means the higher-income spouse must pay tax on any gains or investment income from those funds. Still, there are lots of ways to shift investment capital and income to the lower-income spouse. These will help lower your tax bill right now, and ensure that you and your spouse get roughly the same amount of…