The Revenue Agency (CRA) of Canada has issued a technical interpretation addressing amounts received from “retirement compensation arrangements” eligible for pension income splitting, effective for tax years 2013 and later. Pension income splitting refers to the possibility to split the pension income with a spouse or partner for the purpose of the pension income tax credit.
According to the new rules, the taxpayer must be at least 65 years of age and the retirement compensation arrangement payments must be in the life annuity payments form and be supplemental to a pension took from a registered pension plan. The payments to be split cannot exceed a specified limit minus other eligible pension income of taxpayer.
