Spousal RRSP contributions are a great way for a higher-income spouse to lower their taxable income by using the tax deduction for the contribution today, while ultimately providing the lower-income spouse with retirement income in the future, but at what is hopefully a lower marginal tax rate than the contributor.                                                                                  

Spousal RRSP may be useful to you in a few circumstances, for example if:

• You anticipate retiring before age 65 (since RRIF income does not qualify for pension income splitting until age 65); or
• You have a spouse who is no more than age 71 at the end of the year, you have available contribution room and you want to make RRSP contributions past age 71

Generally, no. While capital gains tax must always be paid whenever you liquidate an investment for more than you paid for it, your principal residence can be 100% exempt from capital gains tax no matter how much it has appreciated over the years.

For tax purposes, almost any type of dwelling can qualify as a principal residence – from your home in the city to a vacation property such as a cottage, mobile home, or houseboat – even if it’s only lived in for part of each year.

If you have multiple properties that qualify for the exemption, you will have to decide which property you wish to designate as your principal residence for every year that you own both.

You can specify how many years that each property would be your principal residence. But just remember that you’ll have to pay capital gains tax on any other properties that have appreciated over that same time period, for the years you are not designating them for the exemption.

You can effectively reduce your tax bill by taking advantage of all the tax deductions and credits that you’re entitled to every year.

Federal tax deductions include (but aren’t limited to) the following:

• RRSP contributions
• Spousal support payments
• Deductible interest charges on loans used to earn income from a business or property
• Union and professional dues
• Contributions to a company pension plan
• Certain moving expenses
• Expenses related to self-employment
• Child care expenses

Federal non-refundable tax credits include (but aren’t limited to) the following:

• Medical expenses (TIP: pool your family medical expenses on the lower income spouse’s tax return)
• Charitable donations (TIP: pool the donations you and your spouse made in the year, or carry them forward up to 5 yrs)
  

In addition to being a great way to save for your children’s post-secondary education, it can also help you build savings while deferring taxes. While RESP contributions aren’t tax-deductible (which means they are not taxable when withdrawn), the money you contribute will keep growing until it’s needed to pay for university or college.  That’s when the income can be taxed at the child’s tax rate, instead of at your higher tax rate.

Yes you can. Beginning in 2007, if you or your partner receive qualified pension income, the income-splitting provisions could mean extra money in your pocket when you file your tax returns. In a nutshell, pension income-splitting allows couples to potentially reduce their overall tax bill by shifting some income from the higher income earner over to the lower income earner, who is taxed at a lower rate.

This is just an allocation for tax reporting purposes, which means the actual income does not actually have to be paid to the partner.