Q&A with Gordon Pape: Tax implications of pension splitting
Question: Since the Harper government brought in provisions allowing for splitting pension income (in addition to the previously existing provisions for splitting CPP) I have split my company pension payments with my wife on our tax returns. This eliminated my potential OAS clawback and balanced our marginal tax rates.
Is the money transferred to my wife for tax purposes now considered to be hers for investment purposes too, so that income or capital gains flowing from such investments is taxable in her hands, and not attributable back to me? – Ray B
Gordon Pape answers: Wouldn’t that be nice? Unfortunately, the answer is no. You didn’t really give your wife any money. All that happened was a data entry change for tax purposes. If you actually gave your wife an equivalent amount of money to invest, the usual income attribution rules would apply.