T1032: Joint election to split pension income

You and your spouse might be eligible to split your pension income if:

• You and your spouse were married (or in a common-law partnership) with each other during the year
• You weren’t living separately because of a breakdown in the relationship for at least 90 days and/or at the end of the year
• You were both residents of Canada on December 31, 2023, or
  • If deceased, you were residents of Canada on the date of the death
  • If you’ve declared bankruptcy in the year, you were residents of Canada on December 31 of the year in which the tax year ends
• You received eligible pension income or you’re 65 years or older and received qualifying amounts from a retirement compensation agreement (box 17 of your T4A-RCA slip)

You can only split your eligible pension income with your spouse or common-law partner, which is the sum of:

• The taxable part of life annuity payments from a superannuation or pension plan and
• If they’re received because of the death of a spouse, or if you’re 65 or older at the end of the year:
  • Annuity and registered retirement income fund (including life income fund) payments
  • RRSP annuity payments
  • Some qualifying amounts from a retirement compensation agreement

As a pensioner, you can’t split:

• Old age security payments
• CPP and/or QPP payments
• Any foreign source of pension income that’s tax-free in Canada
• Income from a United States individual retirement account (IRA)
• Amounts from a RRIF and transferred to an RRSP, another RRIF, or an annuity

Click this link to learn more about eligible pension income.

If you’re a resident of Québec, you and your spouse might decide to include a portion of your retirement income in the calculation of your spouse’s income. When doing so, you must also transfer the corresponding Québec income tax (including the health contribution) that was withheld from that income.

You can split up to 50% of your eligible pension income with your spouse. To do this, both you and your spouse must complete and file this form using the same information. You should also keep in mind that you can only file one joint election for the tax year, so you’ll need to decide whose pension income you’ll split. Don’t worry, you can always change the spouse whose pension income you’ll split and the percentage of the split next year.

Once you’ve decided whose pension income you’ll split and the amount to split, you will need to also allocate the tax that was deducted from your pension income to your spouse in the same proportion as the pension.

Fortunately, H&R Block's tax software automatically splits your eligible pension income and the total tax you enter in the Splitting your pension income section of your return at 50%, unless otherwise stated.

Example:

Let’s say you and your spouse are preparing your returns together and your total income for 2023 is $70,000, of which $30,000 was eligible pension income. Your spouse didn’t get any pension income in 2023 but had a total income of $10,000. You can split up to $15,000 (50% of $30,000) of your pension income with your spouse in the Splitting your pension income section of your return.

Your T4A slip (box 22) shows that $5,000 was deducted in income tax from your pension income. This amount will also need to be deducted in the same proportion as the pension split – 50% in this case. In H&R Block's tax software, you'll only need to enter the total tax that was deducted from your pension income and it will automatically split it at 50%.

If you want to only split $10,000 (33% of $30,000) of your pension income with your spouse, enter that amount in the designated field of the Splitting your pension income section. The tax software will automatically split the total tax you entered on the page in the same proportion.

Follow these steps in H&R Block’s 2023 tax software:

Before making a joint election to split pension income, make sure you and your spouse are preparing your returns together.

If you're the one who is splitting the pension income with your spouse, you will need to start your return first and then enter your spouse's information. By doing this, you'll be able to optimize the pension income split on the Your income page found in the Wrap-Up tab.

1. Under Final Review, go to the Optimized Credits.

2. On the Your income page, scroll down to the Splitting your pension income section and enter your information into the tax software.

Important: If you make any changes to your or your spouse’s personal information, information slips, or income amounts, be sure to click the Optimize Now button again under the Splitting your pension income section on the Your income page. This will re-calculate your optimized split amount to get you the best refund or reduce your tax owing.

Important: If you're the one who is splitting the pension income with your spouse, you will need to start your return first and then enter your spouse's information. By doing this, you'll be able to optimize the pension income split on the Your income page.

Make sure you have the following information on hand when completing the Splitting your pension income section:

• Your and/or your spouse’s T4A, T4RIF, T4A-RCA, T4RSP, T3, and T5 slips and if applicable, RL-2, RL-3 and RL-16 slips
• Your and/or your spouse’s gross foreign pension income in Canadian dollars

Calculating your eligible pension income

To calculate the amount of your pension income that’s eligible for splitting, follow these steps:

1. Add the amounts from:
   • box 16 of your T4A slips
   • box 31 of your T3 slips
   • box 24, 133, or 194 of your T4A slip
   • boxes 16 and 20 of your T4RIF slip
   • box 19 of your T5 slips
   • your gross foreign pension income in Canadian dollars

This amount is your total pension income.

2. Subtract the following from your total pension income:
   • Foreign pension income that’s tax-exempt because of a tax-treaty
   • Income from a U.S. individual retirement account (IRA) and
   • Amounts from a RRIF or PRPP that were transferred to an RRSP, RRIF, PRPP or an annuity

3. Add any annuity payments shown in box 16 of your T4RSP slip if you were 65 or older on December 31, 2023, or if you received payments because of the death of your spouse

The amount calculated is your eligible pension income. If you're the pension transferee, enter this amount in the designated field on the Your income page.

If you’re a Québec resident, your eligible retirement income is the:

Total of:

• box A, box B, and box K of your RL-2 slip
• box J of your RL-3 slip
• box D of your RL-16 slip
• the retirement income security benefit (RISB) received under the Canadian Forces Members and Veterans Re-establishment and Compensation Act; and
• your life annuity payments under a retirement compensation arrangement (if certain conditions are met – contact Revenu Québec for more information)

minus

• the amount from above which you paid to purchase an annuity or transferred to an RRSP, a RRIF or a PRPP/VRSP
• deduction claimed for refund of an unused PRPP/VRSP contributions included in your retirement income above
• a deduction claimed for income that’s exempt under a tax treaty

Where can I find the total tax that was deducted from my pension income?

You can find the amount of tax that was deducted from your pension income on the following information slips. You’ll need to enter the total tax deducted from your eligible pension income and not just the amount you’re splitting.

• box 22 of your T4A slips
• box 28 your T4RIF slips
• box 30 of your T4RSP slips
• box 22 of your T4A-RCA slips
• box J of your RL-2 slips (Québec)

Note: Make sure that the tax deducted is for your eligible pension income only. If the tax withheld is for both eligible and non-eligible income, you’ll need to calculate the portion of tax deducted on only the eligible pension income using the formula below and enter that in the designated field under the Splitting your pension income section:

(Eligible pension ÷ total of eligible and non-eligible pension) × total tax deducted