Tax returns and RRIFs

Question: My and Wife and I are now at the age of drawing out our RIF. Should we file separately or together?


This depends on The level of income. If your spouse is not taxable (i.e. total income sources do not exceed The basic personal amount, The age amount, The disability amount and The pension income amount), it is possible to file one return and report income and transfer any unused age, disability and pension income amounts via Schedule 2 to The higher income earner. In some cases, however, it may be advantageous for The lower income earner to file a return to claim certain provisions, for example The medical expense supplement, if qualifying income is earned, or refundable tax credits like The GST credit or provincial tax credits.

Resulting investment earnings are then taxed at The lower earner’s lower tax rate. Other reasons to file may be to report capital losses incurred in investment portfolios held outside registered funds, or to carry forward certain other provisions like previous minimum tax balances or charitable donations balances. Whenever a major change like this occurs, it is probably wise to seek some professional tax help, tplan withdrawals tax efficiently. RRIF withdrawals should be planned around some important budget changes: if you are planning larger withdrawals to meet a specific goal—like a major trip–and can defer and withdraw in The year 2001 instead of 2000, you may qualify for a reduced middle tax rate, for example.