Contributions to a spousal or common-law partner RRSP are taxed in the hands of the contributing spouse or common-law partner if there are withdrawals from the plan within three years of the date of contribution.
The exception to this rule is when the RRSP is converted to a RRIF. Conversion to a RRIF must occur by the end of the year the annuitant spouse or common-law partner reaches the age of 69.
Have the higher income spouse or common-law partner maximize contributions to the RRSP plan in the 3 years prior to the low income spouse or common-law partner becoming 69 years of age. Subsequently, the minimum annual withdrawals from the RRIF will be taxable to the beneficiary spouse or common-law partner and not the contributing spouse or common-law partner.
Do not withdraw excess amounts within the first three years of the RRIF as these amounts will be taxable to the contributing spouse or common-law partner.
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