What 'income' is eligible for pension splitting? | Page 2 | RRSPs and RRIFs | Discussion forum

AltaRed said
You cannot 'share' CPP with spouse via tax software. That is a separate 'in advance' process within CPP itself via Service Canada by application. The T4A(CPP) is what it is for each spouse. Tax software cannot do splits of it.  

Yes, I know. What I should have said….is will do a test “share” amount to determine if we should apply to make a change.

Loonie said
If you are going to try to "test" this yourself, be aware that it's a tricky calculation. You will need proof of how long you've been together or
married, and CPP will evaluate that. Note that the "share" goes both ways. You each share your pension with the other in order to come up with result. This means the sharing may not be as valuable as hoped.

That’s interesting. Thought could be 1 way. Thanks for the heads up.

If you take your pension at an age other than 65 , that will further complicate things too, as it's all based on what you would have received at 65, which you probably don't know and they probably can't tell you. Beware of the word "estimate". The estimates they send you with periodic contribution statements are not reliable.

Ok. We both took at age 60.

Honestly, it's almost impossible to come up with the same calculation as CPP, and nobody in CPP office will be able to tell you in advance either. All I could get out of them was that it would be calculated when application received. You don't get any information until the pension is doled out, and even then there is no accounting for it. At that point, I gave up and had to accept their conclusion.

Ok

Pension "splitting" is much simpler and easier for you to control

Have done splitting for years.

Something else to be aware of: you will read or be told that you cannot reverse your decision share. This is not true. There is a form where you can APPLY to reverse your choice. I have no idea how difficult they make this.

Web site says…….

When pension sharing stops
Pension sharing stops in whichever month occurs first:

the month following the month Service Canada approves a cancellation request submitted by both you and your spouse or common-law partner
the month you divorce
the month the spouse or common-law partner who has never paid into the CPP (or QPP) begins contributing, or
the month one of you dies (contact Canada Pension Plan as soon as possible to notify us of the date of death of the CPP pensioner/beneficiary)
To cancel pension sharing
To cancel a pension sharing arrangement:

complete the Cancellation of Pension Sharing form (ISP1014)
print and sign the form
mail it to us, or drop it off at a Service Canada office

I will take my existing tax file to “test” after I rename it. Which has full optimization run on it. Then add say…..$3600 to wife’s T4 for CPP and deduct $3600 from my T4 for CPP. Then optimize and see what the difference is. At that point I will decide to pursue or not.

It’s just to make sure that I am not missing on a savings. And to prove if splitting is the best solution.

Good luck!  

OK.
A couple of other thoughts based on your response:

I didn't realize you and spouse have already been receiving CPP. While I know you can cancel the sharing (and you have found the right form reference for that), I am not at all sure that you can commence it while already receiving it. Logically, you should be able to, but logic may not apply.
When I was first looking into this, I was told by CPP rep that we could ONLY apply when the second of us was starting CPP pension. That was at least five years ago and I'm not sure how reliable it was I suggest you call CPP to check how/if it can be done now, or perhaps you can find something from them online.

I understand you are doing a rough test, but bear in mind that it will never be as simple as moving X dollars from one person to the other.

1. It will be discounted according to how many years each of you contributed - likely not identical, but possible;

2. Don't forget that your wife will also have to share her pension with you, which will effectively reduce sharing potential.

3. Your tax software will not be able to do anything but accept your estimate, will not be able to make any calculations re: sharing. The T slip is set in stone on this question. I think you know this, but just clarifying.

Not sure who you both are addressing.

BUT I DO GET WHAT YOU ARE BOTH SAYING.

I AM ONLY GOING TO DO A “TEST” TO SEE HOW IT AFECTS OR CHANGES MY TAX REPORTING. I DO REALIZE THE NUMBERS I CHOOSE MY BE INACCURATE BASED ON CRA CALCULATIONS FOR A SHARE ……BUT…… I CAN’T SEE THE “TOTAL” BETWEEN THE 2 OF US CHANGING.

I find it hard to believe that you have to set up sharing from the get go or the age of 65. Some of us may have a spouse with a 15 year age difference.

My test will tell me to pursue or not.

Online sample.

So looks interesting.